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Stock Based Compensation | 12 Months Ended
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Feb. 28, 2021
Notes to Financial Statements |
Stock Based Compensation | NOTE 4: STOCK-BASED COMPENSATION Stock Options – Under the 2013 Stock Incentive Plan, as amended (the "2013 Plan"), options can be granted to officers, directors, consultants and employees of the Company and its subsidiaries to purchase up to 2,500,000 shares of the Company's common stock. Under the 2013 Plan options expire ten years after the date of grant. As of February 28, 2021, there were 460,959 options outstanding under the 2013 plan. Under the 2003 Stock Incentive Plan, as amended (the "2003 Plan"), until May 2013, options were available to be granted to officers, directors, consultants and employees of the Company and its subsidiaries to purchase up to 1,500,000 of the Company's common shares. As of February 28, 2021, there were 47,500 options outstanding under the 2003 Plan, under which no additional options may be granted. Under the 2013 Stock Incentive Plan, option prices must be at least 100% of the fair market value of the common stock at time of grant. For qualified employees, except under certain circumstances specified in the plan or unless otherwise specified at the discretion of the Board of Directors, no option may be exercised prior to one year after date of grant, with the balance becoming exercisable in cumulative installments over a three-year period during the term of the option, and terminating at a stipulated period of time after an employee's termination of employment. During fiscal 2021, the Company granted options to acquire 60,500 shares to employees exercisable at prices ranging from $3.70 to $4.45 and options to acquire 20,000 shares to the non-employee members of the board of directors with an exercise price of $3.70. The options granted to employees and directors vest over three years and expire in ten years. The options granted by the Company during fiscal 2021 had a combined weighted average grant date fair value of $2.20 per share. During fiscal 2020, the Company granted options to acquire 17,500 shares to employees exercisable at prices ranging from $2.10 to $2.65, options to acquire 20,000 shares to the non-employee members of the board of directors with an exercise price of $2.65 and options for 200,000 shares to an officer and director exercisable at prices of ranging from $2.45 to $2.65. The options granted to employees and directors vest over three years and expire in ten years. The options granted to the officer vested upon grant and expire in ten years. The options granted by the Company during fiscal 2020 had a combined weighted average grant date fair value of $0.34 per share. A summary of the activity of both plans for fiscal 2021 and fiscal 2020 is as follows:
|  |  |  |  |  |  |  | Weighted Average |
|  | Stock Options |  |  | Exercise Price $ |  |  | Remaining |
|  | Outstanding |  |  | Exercisable |  |  | Outstanding |  |  | Exercisable |  |  | Term - Years |
Balance - February 28, 2019 |  |  | 588,000 |  |  |  | 171,000 |  |  | $ | 1.10 |  |  | $ | 0.85 |  |  |  | 4.70 |
Granted |  |  | 237,500 |  |  |  |  |  |  |  | 2.55 |  |  |  |  |  |  |  |  |
Exercised |  |  | (231,333 | ) |  |  |  |  |  |  | (0.88 | ) |  |  |  |  |  |  |  |
Cancelled |  |  | (2,500 | ) |  |  |  |  |  |  | (1.17 | ) |  |  |  |  |  |  |  |
Balance - February 29, 2020 |  |  | 591,667 |  |  |  | 339,250 |  |  | $ | 1.77 |  |  | $ | 2.03 |  |  |  | 7.59 |
Granted |  |  | 80,500 |  |  |  |  |  |  | $ | 4.05 |  |  |  |  |  |  |  |  |
Exercised |  |  | (161,208 | ) |  |  |  |  |  |  | (1.05 | ) |  |  |  |  |  |  |  |
Cancelled |  |  | (2,500 | ) |  |  |  |  |  |  | (2.55 | ) |  |  |  |  |  |  |  |
Balance - February 28, 2021 |  |  | 508,459 |  |  |  | 333,500 |  |  | $ | 2.35 |  |  | $ | 2.17 |  |  |  | 6.99 |
The aggregate intrinsic value of the Company’s vested and exercisable options at February 28, 2021 was $692,490 . For the years ended February 28, 2021 and February 29, 2020, the Company recognized $47,633 and $90,305 in stock based compensation expense for the years then ended, respectively. Such amounts are included in general and administrative expenses on the statement of operations. Total compensation expense related to non-vested options not yet recognized as of February 28, 2021 was $185,000 and will be recognized on a straight-line basis through January 2024. The amount of future stock option compensation expense could be affected by any future option grants or by any forfeitures. During the year ended February 28, 2021, the Company had net settlement exercises of stock options, whereby, the optionee did not pay cash for the options but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise. Net settlement exercises during the year ended February 28, 2021 resulted in 104,476 shares issued and 56,732 options cancelled in the settlement of shares issued. Determining the appropriate fair value of the stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and the expected stock price volatility. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected term of the options is estimated based on the Company’s historical exercise rate. The expected life of awards that vest immediately use the contractual maturity since they are vested when issued. For stock price volatility, the Company uses its expected volatility of the price of the Company’s common stock based on historical activity. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option at the grant-date. The weighted-average fair value of options has been estimated on the date of grant using the Black-Scholes options-pricing model. The weighted-average Black-Scholes assumptions are as follows:
|  | Fiscal Year Ended |
|  | February 28, 2021 |  |  | February 29, 2020 |
Expected life |  |  | 5 - 8 years |  |  |  | 1 - 8 years |
Risk free interest rate |  |  | 0.46% - 0.78% |  |  |  | 1.58% - 2.05% |
Expected volatility |  |  | 48.88% - 58.63% |  |  |  | 27.46% - 32.24% |
Expected dividend yield |  |  | 0% |  |  |  | 0% |
For the years ended February 28, 2021 and February 29, 2020, net income and earnings per share reflect the actual deduction for stock-based compensation expense. The impact of applying ASC 718 was $47,633 and $90,305 in additional compensation expense for the years then ended, respectively. Such amount is included in general and administrative expenses on the statement of operations. The expense for stock-based compensation is a non-cash expense item.

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- Definition Tabular disclosure of number, weighted-average exercise price or conversion ratio, aggregate intrinsic value, and weighted-average remaining contractual term for exercisable or convertible options that are fully vested and expected to vest. Includes, but is not limited to, unvested options for which requisite service period has not been rendered but that are expected to vest based on achievement of performance condition, if forfeitures are recognized when they occur. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (e)(2) -URI http://asc.fasb.org/extlink&oid=120381028&loc=d3e5070-113901 + Details
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