XML 30 R16.htm IDEA: XBRL DOCUMENT

Note 9 - Stock Options

12 Months Ended

Oct. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 9 – Stock options

Incentive and non-qualified stock option plans

On July 22, 2020, the Company’s Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”). In September 2020, the Company’s stockholders approved the 2020 Plan by vote as required by NASDAQ. An aggregate of 1,250,000 shares of common stock was set aside and reserved for issuance under the 2020 Plan. As of October 31, 2022, 916,369 shares of common stock were remaining for future grants of stock options under the 2020 Plan.

Additional disclosures related to stock option plans

On January 12, 2021, we granted a total of 33,500 shares of restricted stock and 67,000 incentive stock options to one manager and three officers. The shares of restricted stock and incentive stock options vest over four years as follows: (i) one-quarter of the restricted shares and options shall vest on January 12, 2022; and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire ten years from the date of grant.

On July 16, 2021, our Chief Executive Officer was granted incentive stock options to purchase 50,000 shares. These options immediately vested on the date of grant, and expire ten years from the date of grant.

On January 10, 2022, we granted a total of 39,666 shares of restricted stock and 106,001 incentive stock options to one manager and three officers. The shares of restricted stock and incentive stock options vest over four years as follows: (i) one-quarter of the restricted shares and options shall vest on January 10, 2023; and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years. All incentive stock options expire ten years from the date of grant.

On May 2, 2022, we granted a total of 39,000 incentive stock options to the following:

●

One employee was granted 12,000 incentive stock options. These options vested with respect to 3,000 shares on the date of grant, and the remaining shares vests in equal installments thereafter on each of the next three anniversaries of May 2, 2022. The options expire ten years from the date of grant.

●

Three employees were each granted 5,000 incentive stock options. These options will vest in two equal installments on the first two anniversaries of May 2, 2022, and expire ten years from the date of grant.

●

Two employees were each granted 6,000 incentive stock options. These options will vest in three equal installments on the first three anniversaries of May 2, 2022, and expire ten years from the date of grant.

No other shares or options were granted to Company employees during fiscal 2022.

The fair value of each option granted in 2022 and 2021 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

		2022				2021
Weighted average volatility			53.36	%			52.34	%
Expected dividends			0.00	%			0.00	%
Expected term (in years)			7.0				7.0
Risk-free interest rate			1.47	%			0.58	%
Weighted average fair value of options granted during the year		$	3.77			$	3.38
Weighted average fair value of options vested during the year		$	2.32			$	3.41

Expected volatilities are based on historical volatility of our stock price and other factors. We used the historical method to calculate the expected life of the 2022 and 2021 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield.

Additional information regarding all of our outstanding stock options at October 31, 2022 and 2021 and changes in outstanding stock options in 2022 and 2021 follows:

		2022								2021
		Shares or				Weighted				Shares or				Weighted
		Price Per				Average				Price Per				Average
		Share				Exercise Price				Share				Exercise Price
Outstanding at beginning of year			618,858			$	5.33				789,179			$	4.66
Options granted			145,001			$	6.94				117,000			$	6.57
Options exercised			(60,854	)		$	2.45				(195,528	)		$	3.10
Options canceled or expired			(12,000	)		$	7.58				(91,793	)		$	5.88
Options outstanding at end of year			691,005			$	5.87				618,858			$	5.33

Options exercisable at end of year			366,714			$	6.13				313,381			$	5.95

Options vested and expected to vest at end of year			685,154			$	5.88				618,522			$	5.35

Option price range at end of year		$1.90 - $8.69								$1.90 - $8.69
											$
Aggregate intrinsic value of options exercised during year		$	245,420							$	642,181

Weighted average remaining contractual life of options outstanding as of October 31, 2022: 6.61 years

Weighted average remaining contractual life of options exercisable as of October 31, 2022: 5.91 years

Weighted average remaining contractual life of options vested and expected to vest as of October 31, 2022: 6.62 years

Aggregate intrinsic value of options outstanding at October 31, 2022: $518,000

Aggregate intrinsic value of options exercisable at October 31, 2022: $265,000

Aggregate intrinsic value of options vested and expected to vest at October 31, 2022: $513,000

As of October 31, 2022, $685,000 and $594,000 of expense with respect to nonvested stock options and restricted shares, respectively, has yet to be recognized but is expected to be recognized over a weighted average period of 2.19 and 0.95 years, respectively.

Under the compensation policies adopted by the Compensation Committee, directors who also are officers and/or employees of the Company do not receive any compensation for serving on the Board. On September 8, 2021, the Board of Directors determined that the compensation payable to directors as Board fees for the next year ending with the 2022 annual meeting of stockholders was the same as they received in 2021 (i.e., $50,000). In addition, effective September 8, 2021, the Board determined that both Board fees and additional chair fees would be paid half in cash and half in restricted stock, and, in light of the additional work required by the chairs, revised the chair fees as follows, $25,000 for the Chairman of the Board, $25,000 for the Audit Committee Chair, $20,000 for the Compensation Committee Chair, $20,000 for the Strategic Planning and Capital Allocation Chair, and $10,000 for the Nominating & Governance Chair. The cash and restricted stock fees vest in four equal quarterly installments commencing on December 8, 2021, with the restricted stock portion determined by dividing the amount of the fee by the 20-day average trailing closing price of the Company’s common stock from the date of grant ($8.21).