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Note 14 - Stock-based Compensation | 6 Months Ended
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May 31, 2024
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] |
14. | STOCK-BASED COMPENSATION
2020 Plan On October 23, 2020, the Company's Board of Directors approved and on November 19, 2020, the stockholders approved the Byrna Technologies Inc. 2020 Equity Incentive Plan (the “2020 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 3,800,000 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 Plan are employees, officers, directors, consultants, advisors and other individual service providers of the Company. Awards are at the discretion of the Compensation Committee. The Company accounts for all stock-based payment awards granted to employees and non-employees as stock-based compensation expense at their grant date fair value. The Company’s stock-based payments include stock options, RSUs, and incentive warrants. The measurement date for employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the employees’ requisite service period, on a straight-line basis. The measurement date for non-employee awards is generally the date the services were completed, resulting in financial reporting period adjustments to stock-based compensation during either the expected term or the contractual term. Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis. Forfeitures are accounted for as they occur. The fair value of each grant is estimated on the date of grant by using either the Black-Scholes, Binomial Lattice, or the quoted stock price on the date of grant, unless the awards are subject to market conditions in which case the Company uses the Monte Carlo simulation model. Due to the Company’s limited history, the expected term of the Company’s stock options granted to employees has been determined utilizing the method as prescribed by the SEC’s Staff Accounting Bulletin, Topic 14. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Stock-Based Compensation Expense Stock-based compensation costs are recognized as expense over the employee's requisite service period, on a straight-line basis. Total stock-based compensation expense was $1.8 million and $3.0 million for the six months ended May 31, 2024 and 2023, respectively. Total stock-based compensation expense was $0.9 million and $1.5 million for the three months ended May 31, 2024 and 2023, respectively. Total stock-based compensation expense was recorded in Operating expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Restricted Stock Units During the six months ended May 31, 2024 the Company granted 600,000 of the RSU's with 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 $6.00 on a 20-day VWAP, the second one-third of the RSUs will be triggered when the Company’s stock trades above $9.00 on a 20-day VWAP, and the final one-third of the RSUs will be triggered when the stock trades above $12.00 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 six months ended May 31, 2023, the Company did not grant "double trigger" RSUs. In addition, the Company also granted 81,656 and 9,805 time-based RSU's during the six months ended May 31, 2024 and 2023, respectively. Stock-based compensation expense for the RSUs for the six months ended May 31, 2024 and 2023 was $0.9 million and $2.0 million, respectively, and for the three months ended May 31, 2024 and 2023 was $0.4 million and $1.0 million, respectively. The assumptions that the Company used in a Monte Carlo simulation model to determine the grant-date fair value of RSU's granted with a double trigger for the six months ended May 31, 2024 were as follows:
Risk free rate |  |  | 4.33 | %
Expected dividends |  | $ | — |
Expected volatility |  |  | 33 | %
Expected life (in years) |  |  | 2.7 |
Market price of the Company’s common stock on date of grant |  | $ | 6.03 |
As of May 31, 2024, there was $1.9 million of unrecognized stock-based compensation cost related to unvested RSUs which is expected to be recognized over a weighted average of 2.0 years. The following table summarizes the RSU activity during the six months ended May 31, 2024:
|  | RSUs |
Unvested and outstanding as of November 30, 2023 |  |  | 976,226 |
Granted |  |  | 634,513 |
Settled |  |  | (658,281 | )
Forfeited |  |  | (75,250 | )
Unvested and outstanding at May 31, 2024 |  |  | 877,208 |
Of the 658,281 restricted units issued, 68,940 units were returned to the Company in exchange for the Company paying for the payroll withholding taxes. For the six months ended May 31, 2024, RSUs of 589,341, net, were issued. Stock Options The Company recorded stock-based compensation expense for options granted to its employees and directors of $0.9 million and $0.9 million during the six months ended May 31, 2024 and 2023, respectively, and for the three months ended May 31, 2024 and 2023 was $0.5 million and $0.5 million, respectively. As of May 31, 2024, there was $2.5 million of unrecognized stock-based compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 1.7 years. Stock Option Valuation The fair value of stock options at the date of grant was estimated using the Black Scholes option pricing model. The assumptions that the Company used to determine the grant-date fair value of stock options granted for the six months ended May 31, 2024 were as follows:
Risk free rate |  | 4.10%
Expected dividends | $ | —
Expected volatility |  | 75.75%
Expected life (in years) |  | 6.5
Market price of the Company’s common stock on date of grant | $ | 6.89
The following table summarizes option activity under the 2020 Plan during the six months ended May 31, 2024:
|  |  |  |  |  | Weighted-Average |
|  | Stock |  |  | Exercise Price Per Stock |
|  | Options |  |  | Option |
Outstanding, November 30, 2023 |  |  | 1,384,666 |  |  | $ | 7.12 |
Granted |  |  | 199,500 |  |  |  | 6.89 |
Exercised |  |  | (244,465 | ) |  |  | 2.20 |
Outstanding, May 31, 2024 |  |  | 1,339,701 |  |  | $ | 9.00 |
Exercisable, May 31, 2024 |  |  | 673,602 |  |  | $ | 9.41 |
Of the 244,465 shares issued upon exercise of options, 37,033 options were used due to cashless exercise.

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