Share-Based Compensation

6 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company’s Equity Incentive Plan (the “2019 Equity Plan”) provided for restricted units, non-qualified incentive options and other unit-based awards for directors, officers and other employees. The maximum number of the Company’s shares that were permitted to be issued under the 2019 Equity Plan was 4,689,339.

On June 10, 2025, the Company established the 2025 Incentive Plan (the “2025 Equity Plan”) which provides for stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, dividend equivalents, restricted stock units, and other stock or cash based awards for directors, officers and other employees. The maximum number of the Company’s shares that may be issued under the 2025 Equity Plan is 268,292.

The Company recognized total share-based compensation expense of $357 thousand and $521 thousand for the three and six months ended June 30, 2025, respectively and $81 thousand and $162 thousand for the three and six months ended June 30, 2024, respectively. The tax benefit recognized was $75 thousand and $109 thousand for the three and six months ended June 30, 2025, respectively and $17 thousand and $34 thousand for the three and six months ended June 30, 2024, respectively.

Estimated fair values of awards were derived by independent third-party valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. The third-party valuations used the guideline public company method (“GPC method”) to estimate the Company’s total equity value and allocated the total equity value between the award units. The GPC method estimates enterprise value based on a comparison of the Company to comparable public companies in a similar line of business and generally applies representative valuation ratios, which relate market prices to selected financial statistics derived from the comparable companies to the subject company after consideration of adjustments for financial position, growth, markets, profitability, reinvestment needs, risk and other factors.

Non-Qualified Stock Options (“NQSOs”)

Primarily all outstanding NQSOs were granted with a life of either five or ten years, with either a three or five-year graded vesting period for service conditions. Some NQSOs also have performance conditions in addition to service conditions. For NQSOs which are exercisable only upon the occurrence of a qualifying event, which is generally defined as a change in control event or a public listing, the Company recognized additional compensation expense of $100 thousand for both the three and six months ended June 30, 2025, respectively, because of the Company’s IPO on June 12, 2025. For NQSOs that are subject only to a service condition, the Company uses a straight-line attribution method, whereas for NQSOs that are subject to a service condition and a performance condition, the Company uses a graded vesting attribution method.

The following table summarizes NQSO activity for the six months ended June 30, 2025:


	Number of Options	Weighted-Average Exercise Price		Weighted-Average Fair Value of Underlying Share	Weighted Average Fair Value per Option at Grant Date	Weighted-Average Remaining Contractual Term (in years)
Outstanding as of January 1, 2025	4,339,808	$	11.94			9.61 years
Granted	—	—
Exercised	—	—
Expired	—
Forfeited	—	—
Outstanding as of June 30 2025	4,339,808	$	11.99			9.11 years
Vested & Exercisable	223,916	$	18.70			8.31 years

The Company recorded compensation expense related to the NQSOs of $355 thousand and $519 thousand for the three and six months ended June 30, 2025, respectively and $76 thousand and $152 thousand for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, the Company had $2.3 million of unrecognized compensation expense expected to be charged to earnings over a period of 4.6 years.

CEO Options

In 2022, as part of the compensation of the Company’s CEO and solely for the services provided by him as a CEO of the Company, ZFSG agreed to issue the CEO share-based awards in the form of 1,526,642 options to purchase shares of the Company held by ZFSG subject to certain vesting conditions (“the CEO Options”). This agreement met the criteria to be deemed a grant. The CEO Options were granted in February 2022 with a contractual term of ten years and a four-year graded vesting period. To estimate the fair value of the CEO Options, the Company used the same valuation methodology and assumptions as for its other unit based awards under the 2019 Equity Plan as described above. The exercise price and the grant-date fair value of the CEO Options were $8.96 and $0.64, respectively.

In December 2024, ZFSG cancelled the original CEO Options and contemporaneously, the Company replaced them with new CEO Options (“the new CEO Options”). The Company issued the new CEO Options in the form of 2,541,407 options to purchase shares of the Company subject to certain vesting conditions. This agreement met the criteria to be deemed a Type 1 modification of the original grant pursuant to ASC Topic 718, Compensation—Stock Compensation. The new CEO Options were granted on December 8, 2024 (the “Modification Date”) with a contractual term of ten years and a 30 month graded vesting period. The exercise price and the grant-date fair value of the new CEO Options were $9.38 and $2.36, respectively.

As a result of the Company’s IPO, the vesting period of the new CEO Options was reduced by six months in accordance with the terms of the award. Accordingly, the Company recorded additional compensation expense of $16 thousand for both the three and six months ended June 30, 2025, respectively. As of June 30, 2025, the Company had $905 thousand of unrecognized compensation expense expected to be charged to earnings over a period of 2.2 years. As of June 30, 2025, 2,541,407 of the new CEO Options were outstanding. None of the new CEO Options were exercised during the three and six months ended June 30, 2025. As of June 30, 2025, 1,714,712 of the new CEO Options were vested and none were exercisable.

Restricted Stock Units (“RSUs”)

All outstanding RSUs were granted with either a three or five-year, graded vesting period. The Company recognized total compensation expense related to the RSUs of $2 thousand for both the three and six months ended June 30, 2025 and $5 thousand and $10 thousand for the three and six months ended June 30, 2024, respectively, using a straight-line vesting attribution method. As of June 30, 2025, the Company had unrecognized compensation expense related to the RSUs of $148 thousand. The total fair value of RSUs vested was $0 and $25 thousand for the three and six months ended June 30, 2025 and $0 and $17 thousand for the three and six months ended June 30, 2024, respectively.

The following table summarizes RSU activity for the six months ended June 30, 2025:


	Six Months Ended June 30, 2025
	Shares	Weighted Average Grant-Date Fair Value
Non-vested
Beginning of period	3,132	$	10.56
Granted	8,823	17.00
Vested	(3,132)	$	10.56
Forfeited	—	—
End of period	8,823	$	17.00