PALISADE BIO, INC. Stock Compensation Disclosure

6. Equity Incentive Plans

In 2013, LBS adopted the 2013 Employee, Director, and Consultant Equity Incentive Plan, (as amended and restated, the “2013 Plan”). No further awards will be made under the 2013 Plan.

In April 2021, the Company’s shareholders approved the Palisade Bio, Inc. 2021 Equity Incentive Plan (the “2021 EIP”). As of December 31, 2025, there were no shares of the Company's common stock available for future issuance as equity-based awards under the 2021 EIP, which excludes the subsequent evergreen share increase in the number of shares of common stock available for issuance under the 2021 EIP that occurred on January 1, 2026.

Also in April 2021, the Company's shareholders approved the 2021 ESPP. All employees are eligible to participate in the 2021 ESPP while employed by the Company. The 2021 ESPP permits eligible employees to purchase common stock through payroll deductions, which may not exceed $25,000 in a calendar year or 5,000 shares of the Company's shares of common stock each offering period, as defined in the 2021 ESPP, at a price equal to 85% of the fair value of the Company's common stock at the beginning or end of the offering period, whichever is lower. The 2021 ESPP is intended to qualify under Section 423 of the Internal Revenue Code. As of December 31, 2025, there have been 31,032 shares of the Company's common stock issued under the 2021 ESPP. As of December 31, 2025, there were 21,464 shares of the Company's common stock available for future issuance under the 2021 ESPP, which excludes the subsequent evergreen share increase in the number of shares of common stock available for future issuance under the 2021 ESPP that occurred on January 1, 2026.

Compensation expense associated with the 2021 ESPP for the year ended December 31, 2025 and December 31, 2024 was approximately $31,000 and $19,000, respectively.

In November 2021, the Company's compensation committee of the Board adopted the Palisade Bio, Inc. 2021 Inducement Award Plan (the "2021 Inducement Plan"). The 2021 Inducement Plan was adopted in order to grant equity-based awards to individuals not previously employed by the Company, as an inducement to join the Company. As of December 31, 2025, there were 50,341 shares of the Company's common stock available for future issuance as equity-based awards under the 2021 Inducement Plan.

Stock Options

Risk-free interest rate. The Company bases the risk-free interest rate assumption on observed interest rates appropriate for the expected term of the stock option grants.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biopharmaceutical industry.

Expected term. The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

The weighted-average grant date fair value of options granted during the years ended December 31, 2025 and December 31, 2024 was $1.00 per share and $3.80 per share, respectively. The grant date fair value of the options vested during each the years ended December 31, 2025 and December 31, 2024 was approximately $0.2 million and $0.4 million, respectively.

Restricted Stock Units

The grant date fair value of the RSUs vested during the year ended December 31, 2025 and December 31, 2024 was approximately $10,000 and $0.1 million, respectively.

In 2025, the Company issued certain RSUs with a cash settlement feature whereby until such time that there are sufficient shares of its common stock available under the 2021 EIP to settle all outstanding equity-based grants under the 2021 EIP, any RSUs issued with the cash settlement feature that vest prior to such time may be settled, at the Company's sole election, in shares of the Company's common stock or in cash based on the fair market value of the Company's common stock on the applicable vesting date. Upon the first occurrence of sufficient shares being available under the 2021 EIP, the settlement of the RSUs will be made exclusively in shares of the Company's common stock. As of December 31, 2025, including any shares which will become available upon future evergreens, the Company has the intent and ability to settle all of the RSU awards with a cash settlement feature in shares of the Company's common stock as of the underlying vesting dates and has therefore recognized the awards as equity-classified in accordance with ASC 718.

Performance Based Stock Units

As of December 31, 2024, a total of 2,952 PSUs remained unvested and outstanding. None of the PSUs vested during the year ended December 31, 2025 and none were forfeited during the year. As of December 31, 2025, a total of 2,952 PSUs remain unvested and outstanding with a weighted-average grant price of $22.28 per share.

Share-Based Compensation Expense

To reduce the ongoing administrative burden and expense associated with the quarterly vesting of the Company's service-based RSUs, on May 28, 2024, the Company's Board approved the immediate accelerated vesting of all unvested service-based RSUs issued to employees that were outstanding as of that date. The accelerated vesting was accounted for as a Type I modification under ASC 718 and accordingly, in the second quarter of 2024 the Company recognized share-based compensation expense associated with the service-based RSUs subject to immediate vesting of approximately $129,000 in general and administrative expenses and approximately $125,000 in research and development expenses.

As of December 31, 2025, the unrecognized compensation expense related to outstanding options was $0.1 million, which is expected to be recognized over a weighted-average period of approximately 1.52 years. As of December 31, 2025, unrecognized compensation expense related to outstanding service-based RSUs was $43.5 million, which is expected to be recognized over a weighted-average period of approximately 2.78 years. As of December 31, 2025, there is no unrecognized compensation expense related to outstanding PSUs.