Stock incentive plans

12 Months Ended

Dec. 31, 2025

10. Stock incentive plans

Stock incentive plans. We currently have one stock incentive plan: the 2014 Equity Incentive Plan, which provides for awards to executives, key employees, directors and consultants. The plan generally provides for awards in the form of: (i) incentive stock options, (ii) non-qualified stock options, (iii) restricted stock, (iv) restricted stock units (which may include performance-based vesting), (v) stock appreciation rights or (vi) limited stock appreciation rights. Awards granted under this plan have exercise prices equal to 100% of the fair market value of the common stock at the date of grant. Awards granted have a ten-year term and generally vest over a two-year to four-year period, unless automatically accelerated for certain defined events. Under our 2014 Equity Incentive Plan, as amended in May 2023, we are authorized to grant awards of up to 2.9 million shares of TransAct common stock. At December 31, 2025, 1,002,690 shares of common stock remained available for issuance under the 2014 Equity Incentive Plan.

Under the assumptions indicated below, the weighted-average per share fair value of stock option grants for 2024 was $3.98. We did not issue any stock options in 2025. We also issued restricted stock units for certain executives and employees that vest over a specified period of time, and in some instances require achieving certain performance metrics. The weighted-average per share fair value of these restricted stock units was $3.59 and $5.81 in 2025 and 2024, respectively. The per share fair value of restricted stock units is the trading value of the stock on the date of the grant.

The table below indicates the key assumptions (on a weighted-average basis) used in the option valuation calculations for options granted in 2024 (we did not grant any options in 2025) and a discussion of our methodology for developing each of the assumptions used in the valuation model:

	Years ended December 31,
	2025		2024
Expected option term (in years)		–		6.1
Expected volatility		–		57.7	%
Risk-free interest rate		–		4.3	%
Dividend yield		–		0.0	%

Expected Option Term - This is the weighted average period of time over which the options granted are expected to remain outstanding giving consideration to our historical exercise patterns. Options granted have a maximum term of ten years and an increase in the expected term will increase compensation expense.

Expected Volatility – The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period approximately equal to the expected option term of the grant. An increase in the expected volatility factor will increase compensation expense.

Risk-Free Interest Rate - This is the U.S. Treasury rate in effect at the time of grant having a term approximately equal to the expected term of the option. An increase in the risk-free interest rate will increase compensation expense.

Dividend Yield –The dividend yield is calculated by dividing the annual dividend declared per common share by the weighted average market value of our common stock on the date of grant. An increase in the dividend yield will decrease compensation expense.

We recorded $1.8 and $1.2 million of share-based compensation expense for 2025 and 2024, respectively, included primarily in general and administrative expense in our Consolidated Statements of Operations. We also recorded income tax benefits of $0.4 million in 2025 and $0.3 million in 2024, related to such share-based compensation. At December 31, 2025, these benefits are recorded as a deferred tax asset, with a corresponding valuation allowance, in the Consolidated Balance Sheets.

Equity award activity in the 2005 Equity Incentive Plan and the 2014 Equity Incentive Plan, as amended, is summarized below:

	Stock Options					Restricted Stock Units
	Number of Shares			Average Price*		Number of Units			Average Price**
Outstanding at December 31, 2024		1,377,113		$	8.41		376,565		$	6.44
Granted		–			–		389,800			3.59
Exercised		–			–		(129,858	)		5.98
Forfeited		(37,375	)		6.67		(100,000	)		6.54
Expired		(573,375	)		9.04		–			–
Outstanding at December 31, 2025		766,363		$	8.03		536,507		$	4.47

*	weighted average exercise price per share

**	weighted average grant stock price per share

The following summarizes information about equity awards outstanding that are vested and expect to vest and equity awards that are exercisable at December 31, 2025:

	Equity Awards Vested and Expected to Vest										Equity Awards That Are Exercisable
	Awards		Average Price*			Aggregate Intrinsic Value (In thousands)			Remaining Term**		Awards		Average Price*			Aggregate Intrinsic Value			Remaining Term**
Stock Options		766,363		$	8.03		$	–		5.7		531,838		$	8.52		$	–		4.78
Restricted stock units		536,507			–			2,146		1.7		–			–			–		–

*	weighted average exercise price per share

**	weighted-average contractual remaining term in years

Shares that are issued upon exercise of employee stock awards are newly issued shares and not issued from treasury stock. As of December 31, 2025, unrecognized compensation cost related to non-vested equity awards granted under our stock incentive plans is approximately $2.2 million, which is expected to be recognized over a weighted average period of 1.9 years.

The total fair value of awards vested was $1.3 million and $0.9 million during the years ended December 31, 2025 and 2024, respectively. No stock options were exercised during the years ended December 31, 2025 and 2024.