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Note 7 - Stock-based Compensation and Equity Transactions

6 Months Ended

Apr. 30, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 7 – Stock-based compensation and equity transactions

On November 1, 2023, we granted 15,202 shares of restricted stock to one officer in lieu of cash compensation. The shares of restricted stock vest over one year as follows: (i) one-quarter of the restricted shares on January 31, 2024 and (ii) the remaining restricted shares shall vest in three equal quarterly installments.

On January 11, 2024, we granted a total of 110,099 shares of restricted stock and 220,001 incentive stock options to one manager and three officers, respectively. 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 11, 2025 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

On April 16, 2024, we granted a total of 25,000 incentive stock options to three managers. The shares of incentive stock options vest over four years as follows: (i) one-quarter of the restricted shares and options shall vest on April 16, 2025 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

On December 2, 2024, we granted 47,500 incentive stock options to seven managers. The shares of incentive stock options vest equally over four years as follows: (i) one-quarter of the options shall vest on December 2, 2025 and (ii) the remaining options shall vest in three equal annual installments over the next three years.

On January 13, 2025, we granted a total of 82,500 shares of restricted stock and 165,000 incentive stock options to two managers 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 13, 2026 and (ii) the remaining restricted shares and options shall vest in 12 equal quarterly installments over the next three years.

No other shares or options were granted to Company employees during the three and six months ended April 30, 2025 and 2024.

The fair value of each option granted during the six months ended April 30, 2025 and 2024 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

		Six Months Ended April 30,
		2025				2024
Weighted average volatility			44.37	%			51.80	%
Expected dividends			0.00	%			0.00	%
Expected term (in years)			6.14				7.00
Risk-free interest rate			4.54	%			4.00	%
Weighted average fair value of options granted during the year		$	1.85			$	1.76
Weighted average fair value of options vested during the year		$	2.39			$	5.09

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 2025 and 2024 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.

Company stock option plans

Descriptions of our stock option plans are included in Note 8 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2024. A summary of the status of the options granted under our stock option plans as of April 30, 2025 and the changes in options outstanding during the three months then ended is presented in the table that follows:

		2025
		Shares or					Weighted
		Price Per					Average
		Share					Exercise Price
Outstanding at beginning of November 1, 2024			874,816				$	5.10
Options granted			212,500				$	3.97
Options exercised			(50,623		)		$	4.07
Options canceled or expired			(25,000		)		$	8.69
Options outstanding at April 30, 2025			1,011,693				$	4.82

Options exercisable at April 30, 2025			543,807				$	5.58

Options vested and expected to vest at April 30, 2025			1,011,693				$	4.82

Option price range at April 30, 2025		$1.90	-	$8.69

Aggregate intrinsic value of options exercised during year		$	43,756

Weighted average remaining contractual life of options outstanding as of April 30, 2025: 7.16 years

Weighted average remaining contractual life of options exercisable as of April 30, 2025: 5.84 years

Weighted average remaining contractual life of options vested and expected to vest as of April 30, 2025: 7.16 years

Aggregate intrinsic value of options outstanding at April 30, 2025: $312,000

Aggregate intrinsic value of options exercisable at April 30, 2025: $162,000

Aggregate intrinsic value of options vested and expected to vest at April 30, 2025: $312,000

As of April 30, 2025, $961,000 and $787,000 of expenses with respect to nonvested stock options and restricted shares, respectively, have yet to be recognized but are expected to be recognized over a weighted average period of 1.6 and 1.4 years, respectively.

Stock option expense

During the three months ended April 30, 2025 and 2024, stock-based compensation expense totaled $227,000 and $248,000, respectively, and was classified in selling and general expense. During the six months ended April 30, 2025 and 2024, stock-based compensation expense totaled $421,000 and $503,000, respectively, and was classified in selling and general expense.