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Note 15 - Stock-based Compensation | 12 Months Ended
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Nov. 30, 2021
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
15. | STOCK-BASED COMPENSATION
2017 Plan The Company has granted stock options and other stock-based awards under its 2017 Stock Option Plan (the “2017 Plan”). The maximum number of shares of common stock which could have been reserved for issuance under the 2017 plan was 1,899,327. The 2017 Plan was administered by the Compensation Committee of the Board. The Compensation Committee determined the persons to whom options to purchase shares of common stock, and other stock-based awards may be granted. Persons eligible to receive awards under the 2017 Plan were employees, officers, directors, and consultants of the Company. Awards were at the discretion of the Compensation Committee. On February 24, 2021, the Company terminated the 2017 Plan and adopted the 2020 Equity Incentive Plan (defined below). In connection with the adoption of the 2020 Plan, the Company cancelled outstanding option awards granted under the 2017 Plan and replaced them with new award agreements evidencing an equivalent award under the 2020 Equity Incentive Plan with no change to any of the material provisions of the 2017 Plan option. 2020 Plan On October 23, 2020, the Board approved and on November 19, 2020 the stockholders approved the Byrna Technologies Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”). The aggregate number of shares of common stock available for issuance in connection with options and other awards granted under the 2020 Plan is 2,500,000. On September 15, 2021, the Company’s Board of Directors approved to increase the number of shares of common stock available for issuance under the 2020 Plan by 1,400,000 shares. The 2020 Plan is administered by the Compensation Committee of the Board. The Compensation Committee determines the persons to whom options to purchase shares of common stock, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), and restricted or unrestricted shares of common stock may be granted. Persons eligible to receive awards under the 2020 Equity Incentive Plan are employees, officers, directors, consultants, advisors and other individual service providers of the Company. Awards are at the discretion of the Compensation Committee. On February 24, 2021, following the termination of the 2017 Plan, the Company replaced outstanding options under the 2017 Plan with options under the 2020 Equity Incentive Plan. There were no substantive changes to the rights of any holder of options granted under the 2017 plan by replacing their award certificates with award agreements under the 2020 plan. The grant dates, exercise prices, expiration dates, and vesting provisions of any of the new award agreements under the 2020 plan that replace the certificates issued under the 2017 plan are identical for each grant and no change in valuation or accounting was required. The Board also amended the definition of Disability in the 2020 Plan to provide that “Disability” has the meaning assigned to such term in any individual employment agreement or award agreement with a plan participant and that if no such definition is provided in an award or employment agreement “Disability” is defined as in the 2020 Plan. Stock Options During the years ended November 30, 2021 and 2020, the Company granted options to employees and directors to purchase 62,000 and 434,250 shares of common stock, respectively. The options issued during the year ended November 30, 2021 vest over three years. During the year ended November 30, 2021, 100,002 stock options were forfeited resulting in net benefit of stock-based compensation of approximately $0.2 million. During the year ended November 30, 2020, the Company granted options to purchase 19,300 shares of common stock to non-employee contractors, respectively. 11,000 options vested immediately and 8,300 options vested over one year. Stock Option Valuation The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and non-employees for the years ended November 30, 2021 and 2020 were as follows: Employee, Director and Non-Employee (Black-Scholes option pricing model)
|  | 2021 |  |  | 2020 |
Risk free rate |  |  | 0.26 | – | 0.64% |  |  |  | 0.00 | – | 1.68% |
Expected dividends |  |  |  | 0% |  |  |  |  |  | 0% |  |
Expected volatility |  |  | 80 | – | 113% |  |  |  | 118 | – | 144% |
Expected life (in years) |  |  | 4 | – | 5 |  |  |  | 2 | – | 5 |
Market price of the Company’s common stock on date of grant |  | $ | 14.74 | – | 20.94 |  |  | $ | 1.90 | – | 14.80 |
Exercise price |  | $ | 14.90 | – | 20.20 |  |  | $ | 1.90 | – | 15.00 |
The following table summarizes option activity under the 2017 and 2020 Plan during the years ended November 30, 2021:
|  |  |  |  |  | Weighted-Average |
|  | Stock |  |  | Exercise Price Per Stock |
|  | Options |  |  | Option |
Outstanding, November 30, 2019 |  |  | 291,167 |  |  |  | 1.40 |
Granted |  |  | 453,550 |  |  |  | 3.30 |
Expired |  |  | (21,250 | ) |  |  | (2.10 | )
Exercised |  |  | (5,500 | ) |  |  | (1.90 | )
Cancelled |  |  | (12,000 | ) |  |  | (13.80 | )
Outstanding, November 30, 2020 (1) |  |  | 705,967 |  |  |  | 3.10 |
Granted |  |  | 62,000 |  |  |  | 17.18 |
Exercised |  |  | (81,182 | ) |  |  | (1.29 | )
Cancelled |  |  | (100,002 | ) |  |  | (5.91 | )
Outstanding, November 30, 2021 (2) |  |  | 586,783 |  |  |  | 3.48 |
Exercisable, November 30, 2021 (2) |  |  | 524,783 |  |  |  |  |
Exercisable, November 30, 2020 (1) |  |  | 505,967 |  |  |  |  |
(1) As of November 30, 2020 all options were governed by the 2017 Plan. (2) As of November 30, 2021 all options were governed by the 2020 Plan. The stock options outstanding at the end of the year had weighted-average contractual life as follows:
|  | 2021 |  |  | 2020 |
|  | (years) |  |  | (years) |
Total outstanding options |  |  | 3.07 |  |  |  | 3.76 |
Total exercisable options |  |  | 2.91 |  |  |  | 3.53 |
Incentive Warrants In December 2018, the Company issued 150,000 incentive warrants to two consultants to purchase common shares. The warrants were issued outside of the 2017 Plan and became fully vested in December 2019. In July 2020, the Company’s Board approved and the Company entered into an agreement with one of the consultants to allow a cashless exercise of 75,000 warrants at $0.155, resulting in the issuance of 68,005 common shares of the Company’s stock. In November 2021, the remaining 75,000 warrants were exercisable pursuant to an agreement with the Company providing for cashless exercise of those warrants and resulting in the issuance of 68,005 shares of common stock. See Note 14, “Shareholders’ Equity,” for additional information. During the year ended November 30, 2020, the Company issued 15,000 incentive warrants valued at $0.01 million with an exercise price of $2.50 per warrant in exchange for services to a marketing consultant to purchase common shares. The incentive warrants were issued outside of the 2020 Plan and were fully vested at issuance. Restricted Stock Units In August 2020, the Company granted the Chief Executive Officer 900,000 restricted stock unit awards (“RSUs”) under the 2020 Equity Incentive Plan. The RSUs shall have a “double trigger” for vesting based on stock price and time, as follows: (1) one-third of the RSUs will be triggered when the Company’s stock trades above $20.00 on a 20-day volume weighted average closing price (“VWAP”), the second one-third of the RSUs will be triggered when the Company’s stock trades above $30.00 on a 20-day VWAP, and the final one-third of the RSUs will be triggered when the stock trades above $40.00 on a 20-day VWAP and (2) the employee must remain employed by the Company for three years from the effective date for the RSUs to vest. During the year ended November 30, 2020, the Company granted employees 673,500 restricted stock unit awards (“RSUs”) under the 2020 Equity Incentive Plan. The RSUs have a “double trigger” for vesting based on stock price and time, as follows: (1) one-third of the RSUs are not subject to any performance trigger, the second one-third of the RSUs will be triggered when the Company’s stock trades above $30.00 on a 20-day VWAP, and the final one-third of the RSUs will be triggered when the stock trades above $40.00 on a 20-day VWAP and (2) the employee must remain employed by the Company for three years from the effective date for the RSUs to vest. During year ended November 30, 2021, the Company granted 174,493 RSUs under the 2020 Equity Incentive Plan. 150,000 of the RSUs have a “double trigger” for vesting based on stock price and time, as follows: (1) one-third of the RSUs are not subject to any performance trigger, the second one-third of the RSUs will be triggered when the Company’s stock trades above $30.00 on a 20-day VWAP, and the final one-third of the RSUs will be triggered when the stock trades above $40.00 on a 20-day VWAP and (2) the employee must remain employed by the Company for three years from the effective date for the RSUs to vest. 15,493 of the RSUs vest in one year. During the year ended November 30, 2021, 3,873 RSUs were forfeited and canceled. In November 2021, the Company entered into a severance agreement with an employee. Based on the terms of the agreement, the employee’s previously issued RSUs granted were reduced to 62,500 RSUs. The RSUs vested immediately. Federal and tax withholding equal to 27,500 RSUs and $0.4 million was withheld from the total proceeds, resulting in net shares granted of 35,000 for $0.5 million. 87,500 RSUs previously granted but not vested were forfeited and canceled as a result of the severance agreement. The Company recorded total severance expense of $0.9 million. RSU Valuation The assumptions that the Company used to determine the grant-date fair value of RSUs granted for the years ended November 30, 2021 and November 30, 2020 were as follows: (Monte Carlo simulation model)
|  | 2021 |  |  | 2020 |
Risk free rate |  |  |  |  | 0.30 | % |  |  |  |  | 0.26 | %
Expected dividends |  |  |  |  | 0.00 | % |  |  |  |  | 0.00 | %
Expected volatility |  |  |  |  | 92 | % |  |  |  |  | 121 | %
Expected life (in years) |  |  |  |  | 3 |  |  |  |  |  | 3 |
Market price of the Company’s common stock on date of grant |  | $ | 20.9 | – | 26.9 |  |  | $ | 14.10 | – | 15.80 |
Exercise price |  | $ |  |  | 0 |  |  | $ |  |  | 0 |
The following table summarizes the RSU activity during the year ended November 30, 2021:
|  | RSUs |
Outstanding, November 30, 2019 |  |  | — |
Granted |  |  | 1,573,500 |
Outstanding, November 30, 2020 |  |  | 1,573,500 |
Granted |  |  | 174,493 |
Vested |  |  | (62,500 | )
Cancelled |  |  | (91,373 | )
Outstanding, November 30, 2021 |  |  | 1,594,120 |
Exercisable, November 30, 2021 |  |  | — |
Stock-Based Compensation Expense Total stock-based compensation expense of $3.2 million and $1.3 million for the years ended November 30, 2021 and 2020, respectively, were recorded in operating expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss. As of November 30, 2021 and 2020, there was $6.8 million and $7.7 million, respectively, of unrecognized expense related to non-vested stock-based compensation arrangements granted. The weighted-average period over which total compensation cost related to non-vested awards not yet recognized is expected to be recognized is 1.82 and 2.77 years as of November 30, 2021 and 2020, respectively.

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