16. STOCK-BASED COMPENSATION

In April 2014, the Company adopted the Medical Transcription Billing, Corp. 2014 Equity Incentive Plan (the “Original Plan”), reserving a total of 1,351,000 shares of common stock for grants to employees, officers, directors and consultants. On April 14, 2017, the Original Plan was amended and restated whereby an additional 1,500,000 shares of common stock and 100,000 shares of Series A Preferred Stock were added to the plan for future issuance (the “A&R Plan”). During 2018, an additional 200,000 shares of Series A Preferred Stock were added to the A&R Plan for future issuance. In May 2020, an additional 2,000,000 shares of common stock and an additional 300,000 shares of Series A Preferred Stock were added to the A&R Plan for future issuance. During 2022, an additional 1,000,000 shares of common stock and 200,000 shares of Series B Preferred Stock were added to the A&R Plan for future issuance. As of December 31, 2025, 374,683 shares of common stock and 16,000 shares of Series B Preferred Stock are available for grant. Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation Committee of the Board of Directors including unrestricted stock grants.

The equity based RSUs contain a provision in which the units shall immediately vest and become converted into common shares at the rate of one common share per RSU, immediately after a change in control, as defined in the award agreement.

Common stock

During 2025, 25,000 RSUs of common stock were granted to each of the five outside members of the Board of Directors with 25% of the shares vesting every six months. During 2024, 226,894 RSUs of common stock were granted to employees and independent contractors to vest at different dates during the years 2024 through 2026. Included therein were 30,000 RSUs of common stock granted over two years to each of the five outside members of the Board of Directors with 25% of the shares vesting every six months. In connection with the death of one director during 2025, all such director’s unvested RSUs fully vested in accordance with the terms of the Company’s equity incentive plan.

The following table summarizes the RSU and restricted stock transactions related to the common and Preferred Stock under the A&R Plan for the years ended December 31, 2025 and 2024:

DISCLOSURE OF SHARE-BASED COMPENSATION ARRANGEMENTS BY SHARE-BASED PAYMENT AWARD

As of December 31, 2025 and 2024, there was approximately $271,000 and $416,000, respectively, of total unrecognized compensation cost related to the common stock RSUs classified as equity that will be expensed through 2027. As of December 31, 2025 and 2024, there were no unrecognized compensation costs related to the Series A and Series B Preferred Stock RSUs.

Of the total outstanding and unvested common stock RSUs at December 31, 2025 and 2024, all of 161,400 and 242,500, respectively, are classified as equity. For both 2025 and 2024, all of the Series B Preferred Stock RSUs are classified as equity.

The following table summarizes the share activity during the years ended December 31, 2025 and 2024 and the amount of common and preferred shares available for grant at December 31, 2025 and 2024:

SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY

At December 31, 2025, there was no liability for taxes withheld in connection with the equity awards. The liability for the cash-settled awards and accrued payroll taxes on equity awards was approximately $6,000 at December 31, 2024, and is included in accrued compensation in the consolidated balance sheet. During the year ended December 31, 2024, approximately $45,000 was paid in connection with the cash-settled awards. There were no cash-settled awards at December 31, 2025. No amounts were paid in connection with cash-settled awards during the year ended December 31, 2025.

Preferred Stock

In February 2023, the Compensation Committee granted executive bonuses to be paid in 34,000 shares of Series B Preferred Stock, with the number of shares and the amount based on specified criteria being achieved during the year 2023. During October 2023, the Compensation Committee approved for issuance 10,000 of the above shares to one of the executives who retired. The remaining shares were not issued and previously accrued amounts were reversed during 2024.

In March 2024, the Compensation Committee approved executive bonuses to be paid in shares of Series B Preferred Stock with the number of shares and the amount based on specified criteria being achieved for the year 2024. There were 34,000 shares awarded. During May 2024, an additional executive bonus with similar terms was approved and 12,000 shares were awarded. During December 2024, the Compensation Committee determined that the financial objectives were attained and all of the performance bonus shares were issued.

Stock-based compensation expense

The Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award. For stock awards classified as equity, the market price of our common stock or Preferred Stock on the date of grant is used to record the fair value of the award and includes the related taxes. For stock awards classified as a liability, the earned amount is marked to market based on the end of period common stock price. The weighted average grant date fair value of the common stock price in connection with the RSUs classified as equity was $2.38 and $2.16 for the years ended December 31, 2025 and 2024, respectively. For the Series B Preferred Stock, the weighted average grant date fair value was $6.33 for the year ended December 31, 2024.

The following table summarizes the components of stock-based compensation expense for the years ended December 31, 2025 and 2024:

SCHEDULE OF EMPLOYEE SERVICE SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS