SHARE BASED COMPENSATION

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

SHARE BASED COMPENSATION

NOTE 7 - SHARE BASED COMPENSATION

Overview

The Company grants share-based compensation awards to the Company’s employees as provided by the 2024 Equity Incentive Plan (“2024 Plan”), which was approved by the Company’s stockholders on October 24, 2024. The 2024 Plan provides that grants may be in any of the following forms: incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards. The 2024 Plan will be administered and interpreted by the Compensation Committee of the Board of Directors. The Compensation Committee has the authority to determine the individuals to whom grants will be made under the 2024 Plan, determine the type, size and terms of the grants, determine the time when grants will be made and the duration of any applicable exercise or restriction period (subject to the limitations of the 2024 Plan) and deal with any other matters arising under the 2024 Plan. All the employees of the Company and its subsidiaries are eligible for grants under the 2024 Plan. Non-employee directors and consultants of the Company are also eligible to receive grants under the 2024 Plan.

The Company has reserved 2,000,000 shares of common stock for the granting of such awards. During the three months ended March 31, 2026 and March 31, 2025, the Company has recognized share-based compensation expense of $394,326 and $330,825, respectively. As of March 31, 2026, the Company has recognized $1,954,082 in share-based compensation expense since initial issuance in February 2025. Share-based compensation expense is recorded in selling, general and administrative expenses on the condensed consolidated statement of operations.

CALLAN JMB INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock Options

During the period, the Company granted 100,000 non-statutory stock options to an executive employee, pursuant to their employment agreement. Half of the options vest as of March 31, 2026 with the remaining options vesting in equal quarterly installments over a 12-month period by March 31, 2027. The options were granted under the Company’s equity incentive plan and are subject to the same terms and conditions, including forfeiture provisions, as the Company’s other stock option awards. The award is included in the stock option activity tables presented below.

A summary of nonstatutory stock option activity during the three months ended March 31, 2026 is included below.

	Number of Awards		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2025		1,187,500	$	4.00		9.11		-
Granted		100,000	$	1.82		9.98		-
Exercised		-		-
Forfeited		-		-
Outstanding at March 31, 2026		1,287,500	$	3.83		9.86		-
Outstanding and exercisable		638,017	$	3.83		9.11		-

The fair value of each option granted was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2025			2026
Expected life (in years)		5.66			5.17
Expected stock price volatility		49.20	%		46.53	%
Risk-free interest rate		4.19	%		4.52	%
Dividend rate		0.00	%		0.00	%

The risk-free interest rate was based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the stock options. Expected volatility was derived using the Company’s peer volatility calculated from its peer companies’ volatilities over the time period commensurate with the expected life of the stock options. The expected life for the stock options granted was calculated using the midpoint assumption equal to the time from the grant date to the midpoint of the weighted average vesting date and the expiration date. The Company does not currently pay dividends on its common stock nor does it expect to in the foreseeable future.

The weighted average grant date fair value of options granted during the three months ended March 31, 2026 was $0.89 per share. As of March 31, 2026, there was $1,174,515 of unrecognized expense for unvested stock options that is expected to be recognized over a weighted average period of 1 year. During the three months ended March 31, 2026 and March 31, 2025, the Company recognized share-based compensation expense of $371,786 and $330,825, respectively, which is recorded in selling, general and administrative expenses on the condensed consolidated statement of operations.

Performance-Based Awards

During the first quarter ended March 31, 2025, the Company granted 225,000 performance-based stock awards to its Chief Executive Officer. The grant date fair value was $4.00 per share. The vesting is subject to the Company meeting certain business and financial goals by October 15, 2026. As of March 31, 2026, none of the performance-based awards were probable of vesting and thus no expense was recognized during the first quarter.

CALLAN JMB INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Market-Based Awards

During the first quarter ended March 31, 2025, the Company granted 250,000 market-based stock awards to its Chief Executive Officer. The weighted average grant date fair value was $0.04 per share, which was calculated using a Monte Carlo simulation model. The vesting is subject to the Company meeting certain market-based targets by October 15, 2026. The Company recognized $1,540 of expense during the first quarter ended March 31, 2026.

The fair value of each market-based awards granted was estimated on the date of grant using a Monte Carlo pricing model with the following assumptions:

	Grant Date
Derived service period (years)		1.44 – 1.48
Dividend rate		-	%
Risk-free interest rate		4.08	%
Expected stock price volatility		41.56	%

The risk-free interest rate was based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of the market-based awards. Expected volatility was derived using the Company’s peer volatility calculated from its peer companies’ volatilities over the time period commensurate with the expected life of the market-based awards. The expected life for the market-based awards granted was calculated using the midpoint assumption equal to the time from the grant date to the midpoint of the weighted average vesting date and the expiration date. The Company does not currently pay dividends on its common stock nor does it expect to in the foreseeable future.

	Performance-Based				Market-Based
	Number of Awards		Weighted- Average Grant Date Fair Value		Number of Awards		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2025		225,000	$	4.00		250,000	$	0.04
Granted
Change in units based on performance		-		-		-		-
Forfeited		-		-		-		-
Outstanding at March 31, 2026		225,000	$	4.00		250,000	$	0.04

Restricted Stock Units

During the three months ended March 31, 2026, the Company granted 75,000 restricted stock units (“RSUs”) to its Board of Directors. The RSUs were awarded at a price equal to the market price of the Company’s underlying common stock on the date of grant. One-fourth of the RSUs vests each calendar quarter of 2026. During the three months ended March 31, 2026, the Company recognized share-based compensation expense of $21,000, which is recorded in selling, general and administrative expenses on the condensed consolidated statement of operations. A total of 18,750 RSUs have fully vested as of March 31, 2026, resulting in the issuance of 18,750 shares of common stock. A total of 56,250 RSUs are expected to vest over the remainder of the year.

	March 31, 2026
	Number of Awards			Weighted Average Grant Date Fair Value
Beginning balance		-		$	-
Issued RSUs during the period		75,000			1.12
Vested RSUs during the period		(18,750	)		1.12
Remaining unvested RSUs		56,250		$	1.12

Stock Warrants

The grant date fair value of the Company’s stock warrants was $2.00, which was calculated using the Black-Scholes Merton option-pricing model with the following assumptions:

	February 2025 Grant Date
Expected life (in years)		5.0
Expected stock price volatility		56.83	%
Risk-free interest rate		4.16	%
Dividend rate		0	%

CALLAN JMB INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)