Note 8. Stock Incentive Plans

The 2022 Plan permits the Company to grant both incentive and nonqualified stock options, as well as restricted stock, unrestricted stock and other stock based awards. No new grants can be issued under the previous 2014 Plan as that plan has expired. Outstanding stock options expire ten years from the grant date. Both plans had outstanding options and restricted stock at June 30, 2026. Restricted stock and stock options from both plans vest by the fourth or fifth anniversary of the date of the grant.

For the 2022 Plan, the option price for any stock options cannot be less than the fair value of the Company’s stock on the grant date. In addition, 95% of the common stock authorized for issuance must have a vesting or exercise schedule of at least one year. For the 2014 Plan, the option price of incentive stock options could not be less than the fair value of the stock at the time an option was granted and nonqualified stock options could have been granted at prices established by the Board of Directors, including prices less than the fair value on the date of grant.

The Company accounts for all of its stock incentive plans under recognition and measurement accounting principles which require that the compensation cost relating to stock-based payment transactions be recognized in the financial statements. Stock-based compensation arrangements include stock options and restricted stock. All stock-based payments to employees are required to be valued at a fair value on the date of grant and expensed based on that fair value over the applicable vesting period.

Stock Options

For the three months ended June 30, 2026 and 2025, the Company recognized $23 thousand and $35 thousand, respectively, in compensation expense for stock options. For the six months ended June 30, 2026, and 2025, the Company recognized $27 thousand and $69 thousand, respectively, in compensation expense for stock options. As of June 30, 2026, there was $226 thousand in unrecognized compensation expense remaining to be recognized in future reporting periods through 2030. The fair value of any stock option grant is estimated at the grant date using the Black-Scholes pricing model. There were no stock options granted during the three months ended June 30, 2026 compared to 2,600 shares issued during the same time period for 2025. There were no stock options granted during the first six months of 2026 compared to 8,200 shares issued during the six months ended June 30, 2025.

Stock Grants

Restricted stock grants – Under the 2022 Plan, during the three months ended June 30, 2026 and 2025, no shares of restricted stock were issued; however, for the six months ended June 30, 2026 and 2025, 20,900 and 21,068 restricted shares, respectively, were granted to employees and non-employee directors. The shares vest over a four-year period. For the three months ended June 30, 2026 and 2025, $208 thousand and $212 thousand, respectively, was expensed as a result of restricted stock grants. For the six months ended June 30, 2026 and 2025, $506 thousand and $426 thousand, respectively, was expensed as a result of restricted stock grants. As of June 30, 2026, there was $1.8 million in unrecognized compensation expense for all restricted stock grants remaining to be recognized in future reporting periods through 2030.