STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK BASED COMPENSATION

NOTE 13 – STOCK BASED COMPENSATION

Stock-based expense for the six months ended June 30, 2024, and June 30, 2023, was $165,000 and $90,000, respectively.

The Company accounts for forfeitures when they occur by reversing any previously accrued compensation expense on forfeited options in accordance with ASC 718, Compensation – Stock Compensation.

On November 17, 2017, the Company’s stockholders approved the adoption of the 2017 Equity Incentive Plan (“2017 Plan”). The 2017 Plan provides for the grant of a maximum of 263,127 shares of the Company’s common stock of which up to 187,948 shares of common stock may be granted for stock options and 75,179 shares of common stock may be issued as restricted stock to Directors and employees of the Company. Stock options and restricted stock awards currently issued under the 2017 Plan vest at 20% per year beginning on the first anniversary of date of grant and the options expire seven years after the grant date.

On May 25, 2022, the Company’s stockholders approved the adoption of the 2022 Equity Incentive Plan (“2022 Plan”). The 2022 Plan provides for the grant of a maximum of 252,340 shares of the Company’s common stock of which up to 168,227 shares of common stock may be issued as restricted stock and 84,113 shares of common stock may be granted for stock options to directors and employees of the Company. The board of directors’ compensation committee specifies the vesting schedules for the restricted stock and options. Option expiration dates are flexible as well but cannot exceed ten years from the grant date.

The stock option plans allow for net settlement of vested options. In a net settlement, the Company, at the direction of the optionee, net settles the options by issuing new shares to the optionee with a value, at the current per share trading price, equal to the total in-the-money or intrinsic value of the options less any necessary tax withholdings on the disqualifying disposition of Incentive Stock Options. The optionee is granted newly issued shares and a small amount of cash in lieu of partial shares. There were no net settlements for the first six months of 2024 or 2023.

For the six months ended June 30, 2024, no stock compensation was issued under any equity incentive plan. For the six months ended June 30, 2023, 10,250 stock options were granted and 10,250 shares of restricted stock were issued. Stock option grant-date fair values for 2023 were computed using the Black Scholes Merton options pricing model with the following weighted-average inputs and assumptions:

	June 30,		June 30,
	2024		2023
Grant date stock price and exercise price	$	—	$	12.03
Dividend yield		—		2.89	%
Expected stock price volatility		—		23.37	%
Risk-free interest rate		—		3.50	%
Expected option life in years		—		6
Total weighted-average fair value of options granted	$	—	$	2.42

A summary of stock option activity for the first six months of 2024 is presented below (Aggregate Intrinsic Value in thousands):

	Shares Subject to Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at beginning of year		137,500		$	13.86		2.1 years		—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited or expired		(25,000	)		14.90		0.7 years		—
Outstanding on June 30, 2024		112,500		$	13.63		0.9 years	$	—
Exercisable on June 30, 2024		106,300		$	13.63		0.8 years	$	—

A summary of restricted stock activity for the six months ended June 30, 2024, is presented below:

	Shares			Weighted- Average Grant Date Fair Value		Average Remaining Contractual Term
Non-vested on January 1, 2024		13,400		$	12.97		3.9 years
Granted		—			—		—
Vested		(8,700	)		13.00		0.7 years
Forfeited		—			—		—
Non-vested on June 30, 2024		4,700		$	12.99		3.4 years

As of June 30, 2024, there was $15,000 and $57,000 of total unrecognized equity-based expense related to unvested stock options and restricted stock awards, respectively, granted under the equity plans that is expected to be recognized over the next five years as follows (dollars in thousands):

Year
2024	$	12
2025		22
2026		22
2027		13
2028		3
Totals	$	72