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Stockholders' Equity | 3 Months Ended
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Feb. 29, 2020
Equity [Abstract] |
Stockholders' Equity | Note 8 – Stockholders’ Equity The Company maintains the 2006 Stock Incentive Plan (the “2006 Plan”) under which it has reserved 1,000,000 shares of the Company’s common stock for issuance pursuant to stock options, restricted stock, stock-appreciation rights (commonly referred to as “SARs”) and stock awards (i.e. performance options to purchase shares and performance units). As of February 29, 2020, and November 30, 2019, there were 305,000 and 325,000 options issued, but not yet exercised, under the 2006 Plan, respectively. As of February 29, 2020, there were 0 shares available for future issuance under the 2006 Plan. The Company maintains the 2012 Equity Incentive Plan (the “2012 Plan”) which became effective December 1, 2011 as approved by the Board of Directors and approved by the stockholders at the 2012 Annual Meeting on July 10, 2012. The 2012 Plan originally reserved 1,500,000 shares of the Company’s common stock for issuance pursuant to stock options, restricted stock, SARs, and other stock awards (i.e. performance shares and performance units). In May 2012, the Board of Directors approved an amendment to the 2012 Plan to increase the number of shares of the Company’s common stock reserved for issuance to 2,500,000 shares. In October 2019, the Board of Directors approved amendments to the plan, subject to ratification by the stockholders, which occurred at the Company’s 2019 Annual Meeting of Stockholders on November 21, 2019. See the Company’s Proxy Statement filed with the Securities and Exchange Commission on October 29, 2019 in connection with the Company’s 2019 Annual Meeting (the “2019 Proxy Statement”). As of February 29, 2020, there were 808,243 service-based options issued, 129,729 service-based restricted common shares granted, 530,851 performance-based and 116,218 market-based restricted common shares granted under the 2012 Plan. As of February 29, 2020, there were 622,510 shares available for future issuance under the 2012 Plan. Service-based vesting condition options The fair value of each option award is estimated on the date of the grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s stock over the most recent period commensurate with the expected life of the Company’s stock options. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term of options granted to employees is based upon historical exercise data. Expected dividends are based on the historical trend of the Company not issuing dividends. There were 44,969 and 0 options granted during the three months ended February 29, 2020 and February 28, 2019, respectively. Variables used to determine the fair value of the options granted for the three months ended February 29, 2020 are as follows:
|  | Three months ended February 29, 2020 |
Weighted average values: |  |  |
Expected dividends |  | 0 | %
Expected volatility |  | 64.25 | %
Risk free interest rate |  | 1.90 | %
Expected life |  | 9.0 years |
Stock option activity for the three months ended February 29, 2020, was as follows:
|  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Outstanding at November 30, 2019 |  |  | 1,089,774 |  |  | $ | 3.30 |  |  |  | 3.91 |  |  | $ | 4,648,111 |
Granted |  |  | 44,969 |  |  |  | 7.26 |  |  |  |  |  |  |  | 813 |
Exercised |  |  | (20,000 | ) |  |  | 2.05 |  |  |  |  |  |  |  | 102,800 |
Expired/forfeited |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |
Outstanding at February 29, 2020 |  |  | 1,114,743 |  |  | $ | 3.49 |  |  |  | 3.94 |  |  | $ | 4,192,762 |
Exercisable at February 29, 2020 |  |  | 1,006,623 |  |  | $ | 3.06 |  |  |  | 3.39 |  |  | $ | 4,191,626 |
The aggregate intrinsic value represents the total value of the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options that would have been received by the option holders had all option holders exercised their options on either February 29, 2020 or November 30, 2019, as applicable. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s stock. For the three months ended February 29, 2020, the Company issued 20,000 common shares to an option holder who exercised options for $41,000. For the three months ended February 28, 2019, the Company issued 2,500 common shares to an option holder who exercised options for $5,700. Significant option groups exercisable at February 29, 2020 and related price and contractual life information are as follows:
|  | Outstanding |  |  | Exercisable |
Range of Exercise Prices |  | Outstanding |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price |  |  | Outstanding |  |  | Weighted Average Exercise Price |
$1.01 to $2.00 |  |  | 422,500 |  |  |  | 1.85 |  |  | $ | 1.73 |  |  |  | 422,500 |  |  | $ | 1.73 |
$2.01 to $3.00 |  |  | 245,000 |  |  |  | 1.85 |  |  | $ | 2.78 |  |  |  | 245,000 |  |  | $ | 2.78 |
$3.01 to $4.00 |  |  | 204,729 |  |  |  | 5.98 |  |  | $ | 3.14 |  |  |  | 204,729 |  |  | $ | 3.14 |
$6.01 to $7.00 |  |  | 3,833 |  |  |  | 6.35 |  |  | $ | 6.52 |  |  |  | 2,111 |  |  | $ | 6.51 |
$7.01 to $8.00 |  |  | 238,681 |  |  |  | 7.99 |  |  | $ | 7.57 |  |  |  | 132,283 |  |  | $ | 7.62 |
|  |  | 1,114,743 |  |  |  | 3.94 |  |  | $ | 3.49 |  |  |  | 1,006,623 |  |  | $ | 3.06 |
A summary of the status of the Company’s non-vested options as of February 29, 2020, and changes during the three months ended February 29, 2020, is presented below:
|  | Options |  |  | Weighted Average Grant-Date Fair Value |
Non-vested at November 30, 2019 |  |  | 125,234 |  |  | $ | 4.70 |
Granted |  |  | 44,969 |  |  |  | 5.03 |
Vested |  |  | (62,083 | ) |  |  | 4.51 |
Forfeited |  |  | — |  |  |  | — |
Non-vested at February 29, 2020 |  |  | 108,120 |  |  | $ | 4.95 |
As of February 29, 2020, there was approximately $521,000 of total unrecognized compensation cost related to non-vested service-related share-based compensation arrangements granted under the 2006 Plan and the 2012 Plan. The cost is expected to be recognized over a weighted-average period of 1.21 years as of February 29, 2020. The total fair value of shares vested during the three months ended February 29, 2020 was approximately $280,000. During the second fiscal quarter of 2018, the Company entered into Amended and Restated Employment Agreements (“2018 Employment Agreements”) with each of the Company’s Co-CEOs. Per the Employment Agreements, each of the Co-CEOs is to receive base grant equity awards in the form of qualified stock options of the Company’s common stock. As of December 20, 2019, David Portnoy and Mark Portnoy were granted 23,636 and 20,000 stock options of the Company’s common stock, respectively. The options were issued under the Company’s 2012 Stock Plan and will vest 1/3 upon grant, 1/3 on December 1, 2020 and the remaining 1/3 on November 30, 2021. The fair value of the options vested through the three months ended February 29, 2020 was approximately $73,000 and is reflected as selling, general and administrative expenses in the accompanying statement of comprehensive income. As of February 29, 2020, there was approximately $147,000 of total unrecognized compensation cost related to the non-vested options of common stock. Performance and market-based vesting condition options Per the 2018 Employment Agreements, based upon certain performance criteria, the Company shall grant David Portnoy and Mark Portnoy a percentage of up to 47,273 and 40,000, respectively, of qualified stock options of the Company’s common stock. For market-based vesting condition options, accounting principles do not require that the market condition be met in order for the compensation cost to be recognized. Fair value of these options has been determined using a Monte Carlo valuation approach. During fiscal 2019, 15,756 and 13,332, respectively, of qualified stock options were forfeited as certain market conditions were not met by the end of the requisite service period. The fair value of these options expensed as of the three months ended February 28, 2019 was approximately $45,000 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income. There were no market-based vesting condition options for the three months ended February 29, 2020. For performance-based vesting condition options, the Company estimates the fair value of the qualified stock options that met certain performance targets by the end of the fiscal 2018 requisite service period using a Black-Scholes valuation model. As of August 30, 2019, the Company granted David Portnoy and Mark Portnoy 26,243 and 22,222 of non-qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2018 service period. These options were issued under the Company’s 2012 Stock Plan and will vest 1/3 upon date of grant, 1/3 on December 1, 2019 and 1/3 on November 30, 2020. The fair value of the options that vested through the three months ended February 29, 2020 was approximately $86,000 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income. As of February 29, 2020, there was approximately $86,000 of total unrecognized compensation cost related to the non-vested options of common stock. Per the Amendment Agreement, based upon certain performance criteria, the Company shall grant Oleg Mikulinsky a percentage of up to 8,000 of qualified stock options of the Company’s common stock. For market-based vesting condition options, accounting principles do not require that the market condition be met in order for the compensation cost to be recognized. Fair value of these options w as determined using a Monte Carlo valuation approach. During fiscal 2019, 2,666, of qualified stock options were forfeited as certain market conditions were not met by the end of the requisite service period. The fair value of these options expensed as of three months ended February 28, 2019 was approximately $4,800 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income. There were no market-based vesting condition options for the three months ended February 29, 2020. For performance-based vesting condition options, the Company estimates the fair value of the qualified stock options that met certain performance targets by the end of the requisite service period using a Black-Scholes valuation model. As of September 4, 2019, the Company granted Oleg Mikulinsky 4,444 of qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2018 service period and per the Amendment Agreement. These options were issued under the Company’s 2012 Stock Plan and will vest 1/3 upon date of grant, 1/3 on December 1, 2019 and 1/3 on November 30, 2020. The fair value of the options that vested through the three months ended February 29, 2020 was approximately $7,600 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income. As of February 27, 2020, the Company granted Oleg Mikulinsky 1,333 of qualified stock options of the Company’s common stock based upon certain performance criteria met by the end of the fiscal 2019 service period and per the Amendment Agreement. These options were issued under the Company’s 2012 Stock Plan and will vest 1/3 upon date of grant, 1/3 on December 1, 2020 and 1/3 on November 30, 2021. The fair value of the options vested through the three months ended February 29, 2020 was approximately $2,000 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of comprehensive income. As of February 29, 2020, there was approximately $11,500 of total unrecognized compensation cost related to the non-vested options of common stock. Restricted common shares Based upon performance measures being obtained during prior fiscal years, David Portnoy and Mark Portnoy earned 304,946 and 265,172 shares of common stock, respectively. Pursuant to the terms of the Employment Agreements, the Co-CEOs each opted to receive a lump sum cash payment in lieu of 30,000 shares of earned common stock which amounted to approximately $444,000 each paid in fiscal 2018. Per the recommendation of the DCCL, as described above, David Portnoy and Mark Portnoy surrendered 157,472 and 134,977 commons shares, respectively, for cash which amounted to $534,917 and $457,327, respectively, in 2019. Based upon performance measures being obtained during prior fiscal years, Oleg Mikulinsky was granted 34,349 shares of common stock.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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