12.        SHARE-BASED COMPENSATION

Stock Option Plans

Our 2016 Equity Incentive Plan provides for the award of up to 1,500,000 shares of our common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards, and other stock-based awards. As of June 30, 2026, performance awards for 200,000 shares of common stock, non-qualified stock options for 372,000 shares of common stock, and 33,500 restricted shares of common stock have been granted under the 2016 Equity Incentive Plan.

Performance Awards

In December 2017, the Compensation Committee of our Board of Directors granted 200,000 performance awards to our employees which were to be paid in shares of our common stock. Whether any performance awards were to vest, and the amount that vests were tied to the completion of service periods ranging from 7 months to 9.5 years at inception and the achievement of our common stock trading at certain pre-determined prices. The awards were expected to vest in increments of 40,000 shares, or five distinct tranches, biannually beginning July 1, 2018, through July 1, 2026. The Compensation Committee reallocated 48,000, 17,500 and 15,200 forfeited performance awards during fiscal 2020, fiscal 2022, and fiscal 2024 respectively, having the same remaining terms and conditions to other current employees. The performance awards granted and reallocated were recorded at estimated fair value using a Monte Carlo simulation in each case. During each of the fiscal years ended June 30, 2026 and 2025 we recorded share-based compensation expense of $28,000 related to outstanding performance awards. On June 30, 2026, there was no unrecognized compensation cost as the fifth and final tranche of awards vested on July 1, 2026.

On July 1, 2026, it was determined by the Compensation Committee that the vesting of the fifth and final tranche of performance awards for 40,000 shares of common stock had been achieved. Each participant elected a net issuance to cover their individual withholding taxes and, therefore, we issued participants 25,230 shares of common stock and paid $926,000 of participant-related payroll tax liabilities.

Non-Qualified Stock Options

In December 2020, the Compensation Committee of our Board of Directors granted non-qualified stock options for 310,000 shares of our common stock to our directors and certain employees under the 2016 Equity Incentive Plan. Whether any stock options vest, and the amount that does vest, is tied to the completion of service periods that range from 18 months to 10.5 years at inception and the achievement of our common stock trading at certain pre-determined prices. We recorded compensation expense of $416,000 for both fiscal years ended June 30, 2026 and 2025 related to these options. The weighted average fair value of the stock option awards granted was $16.72, calculated using a Monte Carlo simulation. We recognize forfeitures for our non-qualified stock options as they occur. As of June 30, 2026, there was approximately $729,000 of unrecognized compensation cost related to these non-vested non-qualified stock options expected to be expensed over the weighted-average period of 39.22 months.

The following is a summary of non-qualified stock option activity under the 2016 Equity Incentive Plan for the fiscal year ended June 30, 2026 and 2025:

The aggregate intrinsic value of options, which represents the cumulative difference between the fair market value of the underlying common stock and the option exercise prices, exercised was $82,000 in fiscal 2025. No options were exercised in fiscal 2026. On June 30, 2026, the options outstanding and exercisable had intrinsic values of $3.8 million and $2.0 million, respectively. On June 30, 2025, the options outstanding and exercisable had intrinsic values of $299,000 and $907,000, respectively.

Restricted Shares

In November 2025, the Compensation Committee awarded 15,500 restricted shares of common stock to our directors and certain employees under the 2016 Equity Incentive Plan. The shares vest ratably over five years from the date of grant. The fair value of the restricted shares on the date of grant was $478,000, based upon the closing price of our common stock on the date of grant. During the fiscal year ended June 30, 2026, we recorded $58,000 of compensation expense related to these restricted shares. As of June 30, 2026, there was approximately $399,000 of unrecognized compensation cost related to these restricted shares expected to be expensed over the weighted-average period of 53 months.

In November 2024, the Compensation Committee awarded 18,000 restricted shares of common stock to our directors and certain employees under the 2016 Equity Incentive Plan. The shares vest ratably over five years from the date of grant. The fair value of the restricted shares on the date of grant was $857,000, based upon the closing price of our common stock on the date of grant. During the fiscal years ended June 30, 2026 and 2025, we recorded $171,000 and $105,000, respectively, of compensation expense related to these restricted shares. As of June 30, 2026, there was approximately $581,000 of unrecognized compensation cost related to these restricted shares expected to be expensed over the weighted-average period of 41 months.

The following is a summary of restricted share activity under the 2016 Equity Incentive Plan for the fiscal year ended June 30, 2026 and 2025:

Employee Stock Purchase Plan

In September 2014, our Board approved the establishment of an Employee Stock Purchase Plan (the “ESPP”), which was approved by our shareholders at our 2014 Annual Meeting. The ESPP conforms to the provisions of Section 423 of the Internal Revenue Code, has coterminous offering and purchase periods of six months, and bases the pricing to purchase shares of our common stock on a formula so as to result in a per share purchase price that approximates a 15% discount from the market price of a share of our common stock at the end of the purchase period. Our Board of Directors also approved that 704,715 shares be reserved for issuance pursuant to the ESPP. An amendment to the ESPP to extend its term for an additional ten years (through 2035) was approved by our Board in October 2023 and by our shareholders at our 2023 Annual Meeting. Additionally, in July 2025 the Compensation Committee amended the ESPP such that the 15% discount from the market price of a share of our common stock is measured at either the beginning or the end of the purchase period, whichever is lower.

During the fiscal years ended June 30, 2026 and 2025, shares totaling 2,262 and 1,593, respectively, were purchased pursuant to the ESPP and allocated to participating employees based upon their contributions at weighted- average prices of $37.75 and $26.42, respectively. On a cumulative basis, since the inception of the ESPP, employees have purchased a total of 39,357 shares. During the fiscal years ended June 30, 2026 and 2025, we recorded stock compensation expense in the amount of $15,000 and $7,000, respectively, relating to the ESPP.