NOTE 8.     STOCK-BASED COMPENSATION

Under the Company’s stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company’s employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black-Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

The Company recognized approximately $1,074,000 and $1,386,000, respectively, in stock-based compensation expense during the three and six months ended June 30, 2026, as compared with $520,000 and $971,000, respectively, for the three and six months ended June 30, 2025.

Stock option activity is summarized as follows:

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. For the three and six months ended June 30, 2026, respectively, the Company received 67,614 and 104,205 options as payment in the exercise of 97,894 and 131,384 options. There were no such exercises for the three and six months ended June 30, 2025. 

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2026 (“2026 Grants”) utilizing a Black-Scholes model.

On June 11, 2026, the Company executed a letter agreement with Stavros Vizirgianakis, pursuant to which Mr. Vizirgianakis was appointed as Executive Chairman of the Company’s Board of Directors. In connection with the agreement, the Company granted Mr. Vizirgianakis 450,000 restricted stock units (“RSUs”). 150,000 RSUs vest immediately on June 11, 2026 (the “Grant Date”); 150,000 RSUs will begin vesting on the first anniversary of the Grant Date and will vest ratably over the 12-month period beginning on such date in equal monthly installments; and 150,000 RSUs will begin vesting on the second anniversary of the Grant Date and will vest ratably over the 12-month period beginning on such date in equal monthly installments. The RSUs have a fair value of $4.65, the closing price of the Company’s stock on the Grant Date.