NOTE 14 – SHARE-BASED COMPENSATION

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period.

Restricted Stock Awards

The Company grants restricted stock awards to employees and directors. As of June 30, 2026, all restricted stock awards are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

The following table summarizes activity for nonvested restricted stock awards for the period presented:

*To satisfy employee tax withholding obligations, these shares were surrendered and cancelled and were recorded as a reduction to additional paid-in capital.

Stock-based compensation expense recorded related to the vesting of restricted stock for the three and six months ended June 30, 2026, was $364,000 and $836,000, respectively. The remaining unamortized stock-based compensation expense related to our restricted stock units at June 30, 2026 was $1.4 million.

Restricted Stock Units

The Company grants restricted stock units (“RSU”) to employees and directors. As of June 30, 2026, all RSU grants are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

The following table summarizes activity for nonvested restricted stock awards for the period presented:

Stock-based compensation expense recorded related to the vesting of RSUs for the three and six months ended June 30, 2026, was $22,000. The remaining unamortized stock-based compensation expense related to our restricted stock units at June 30, 2026 was $1.1 million.

Performance Based Restricted Stock Units

In June 2026, the Company began granting performance based restricted stock units (“PBRSUs”) to certain employees. PBRSUs contain both market and service vesting conditions and are accounted for as equity-classified stock-based compensation awards. Vesting of PBRSUs can range from 0% to 200% of the target awards granted based on the Company’s relative total shareholder return as compared to the total shareholder return of the Company’s performance peer group over the applicable performance period.

The grant-date fair value of the PBRSUs was estimated using a Monte Carlo simulation model. The model incorporated certain assumptions, including the expected term, expected stock price volatility of the Company and its peer group, correlation coefficients between the Company and each peer group company, the risk-free interest rate, and the expected dividend yield. The expected term is based on the time remaining in the performance period as of the grant date. Expected volatilities for the Company and each peer group company were estimated using historical stock price volatility over a period consistent with the remaining performance period as of the grant date. The risk-free interest rate is based on the yield of the U.S. Treasury Constant Maturity for a term consistent with the remaining performance period. The expected dividend yield is based on management's expectation that the Company will not declare or pay cash dividends during the remaining performance period.

The table below reflects the ranges for the assumptions used in the Monte Carlo model for the PBRSUs:

The grant-date fair value is recognized as compensation cost on a straight-line basis. The Company recognizes compensation cost over the requisite service or performance period. The Company accounts for forfeitures as they occur.

Compensation costs related to PBRSUs are recorded as general and administrative expense. The unrecognized cost associated with PBRSU awards was $0.6 million at June 30, 2026. The Company expects to recognize the unrecognized compensation cost for PBRSU awards over a weighted-average period of approximately 2.5 years.

The following table summarizes information regarding the PBRSU activity for the period presented:

(1) Determined by dividing the aggregate grant-date fair value of awards by the number of awards issued.

(2) The aggregate grant-date fair value of PSUs issued for the six months ended June 30, 2026 was $0.7 million

Options

During the six months ended June 30, 2026, no stock options were granted, and the Company recognized stock option expense of $39,000. The remaining amount of unamortized stock options expense at June 30, 2026 was $61,000.

The intrinsic value of outstanding and exercisable options at June 30, 2026 was $0.

Option activity during the six months ended June 30, 2026, was: