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STOCK-BASED COMPENSATION

12 Months Ended

Feb. 28, 2025

Equity [Abstract]

STOCK-BASED COMPENSATION

NOTE 4: STOCK-BASED COMPENSATION

Stock Options – In May 2023, the Company’s Board of Directors authorized the creation of the 2023 Stock Incentive Plan (the “2023 Plan”) pursuant to which the Company may grant up to 2,500,000 options or shares to officers, directors, employees and consultants of the Company and its subsidiaries. The Company’s shareholders approved the adoption of the 2023 Plan in August 2023. The 2023 Plan replaced the 2013 Stock Incentive Plan (the “2013 Plan”) under which no additional options or shares could be granted after June 2023. There are currently 217,229 and 210,770 options outstanding, respectively, under the 2023 Plan and the 2013 Plan.

During fiscal 2025, the Company granted options to acquire 134,656 shares to employees exercisable at prices ranging from $4.12 to $4.87 and options to acquire 26,667 shares to the non-employee members of the board of directors with an exercise price of $4.12. The options granted to employees and directors vest over three 3 years and expire in ten 10 years. The options granted by the Company during fiscal 2025 had a combined weighted average grant date fair value of $4.13 per share.

During fiscal 2024, the Company granted options to acquire 54,813 shares to employees exercisable at prices ranging from $4.79 to $5.60 and options to acquire 18,380 shares to the non-employee members of the board of directors with an exercise price of $4.79. The options granted to employees and directors vest over 3 three years and expire in 10 ten years. The options granted by the Company during fiscal 2024 had a combined weighted average grant date fair value of $3.11 per share.

A summary of the activity for both plans, for fiscal 2025 and fiscal 2024 is as follows:

										Weighted Average
		Stock Options								Exercise Price $								Remaining
		Outstanding				Exercisable				Outstanding				Exercisable				Term - Years
Balance - February 28, 2023			250,759				133,609			$	4.84			$	4.62				8.52
Granted			73,193							$	5.02
Exercised			(19,701	)							(3.62	)
Cancelled			(8,709	)							(4.20	)
Balance - February 29, 2024			295,542				181,376			$	4.99			$	4.89				8.04

Granted			161,323							$	4.13
Exercised			(1,209	)							(3.19	)
Cancelled			(27,657	)							(5.49	)
Balance - February 28, 2025			427,999				226,913			$	4.64			$	4.90				7.93

The aggregate intrinsic value of the Company’s vested and exercisable options at February 28, 2025 was $47,694.

For the years ended February 28, 2025 and February 29, 2024, the Company recognized $248,000 and $204,000 in stock based compensation expense, respectively. Such amounts are included in general and administrative expenses on the consolidated statements of income. Total compensation expense related to non-vested options not yet recognized as of February 28, 2025 was $407,000 and will be recognized over the next 3 three years based on vesting date. 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, 2025, 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. Cashless exercises during the year ended February 28, 2025 resulted in 273 shares of common stock 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.

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, 2025		February 29, 2024
Expected life		5 - 8 years		5 - 8 years
Risk free interest rate		3.64% - 4.39%		2.82% - 4.39%
Expected volatility		55.19% - 60.34%		55.02% - 62.48%
Expected dividend yield		0%		0%