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Stockholders' Equity | 9 Months Ended
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Aug. 31, 2022
Equity [Abstract] |
Stockholders' Equity | Note 7 – Stockholders’ Equity Employee Stock Incentive Plan 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 August 31, 2022, and November 30, 2021, there were 22,500 and 75,000 options issued, but not yet exercised, under the 2006 Plan, respectively. As of August 31, 2022, there were no shares available for future issuance under the 2006 Plan. The 2006 Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the 2006 Plan on or after the 10-year anniversary of the effective date of the 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 August 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. As of August 31, 2022, there were 243,964 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 November 30, 2021, there were 460,943 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 August 31, 2022, there were no shares available for future issuance under the 2012 Plan. The 2012 Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the 2012 Plan on or after the 10-year anniversary of the effective date of the 2012 Plan, which is December 1, 2011. On April 8, 2022, the Board of Directors of the Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”) to provide incentive compensation to the Company’s employees, independent directors and independent contractors. The plan was approved by the Company's stockholders on October 3, 2022 at the Company’s 2022 Annual Meeting. The 2022 Plan will reserve 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). As of August 31, 2022, there were 52,500 service-based options issued and 400,000 market-based restricted options granted. As of August 31, 2022, there were 1,047,500 shares available for future issuance under the 2022 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 other than the one-time, special cash dividend declared by the Board of Directors on August 19, 2022. There were 0 and 52,500 options granted during the three and nine months ended August 31, 2022, respectively. There were 0 and 20,000 options granted during the three and nine months ended August 31, 2021, respectively. Variables used to determine the fair value of the options granted for the three and nine months ended August 31, 2022 and 2021, respectively, are as follows:
|  | Three months ended |  | Nine months ended
|  | August 31, 2022 |  | August 31, 2021 |  | August 31, 2022 |  | August 31, 2021
Weighted average values: |  |  |  |  |  |  |  |
Expected dividends |  | — |  | — |  | 0% |  | 0%
Expected volatility |  | — |  | — |  | 53.23% |  | 49.85%
Risk free interest rate |  | — |  | — |  | 2.74% |  | 1.35%
Expected life |  | — |  | — |  | 3 years |  | 6 years
Stock option activity for options with only service-based vesting conditions for the nine months ended August 31, 2022, was as follows:
|  |  |  |  | Weighted |  |  | Weighted Average Remaining |  |  |  |
|  |  |  |  | Average |  |  | Contractual |  |  | Aggregate |
|  | Options |  |  | Exercise Price |  |  | Term (Years) |  |  | Intrinsic Value |
Outstanding at November 30, 2021 |  |  | 537,443 |  |  | $ | 5.76 |  |  | 5.22 |  |  | $ | 3,564,067 |
Granted |  |  | 52,500 |  |  |  | 13.20 |  |  |  |  |  |  | — |
Exercised |  |  | (182,229 | ) |  |  | 3.03 |  |  |  |  |  |  | 645,304 |
Expired/forfeited |  |  | (87,250 | ) |  |  | 6.15 |  |  |  |  |  |  | 150,075 |
Outstanding at August 31, 2022 |  |  | 320,464 |  |  | $ | 8.42 |  |  |  | 4.73 |  |  | $ | 136,007 |
Exercisable at August 31, 2022 |  |  | 231,230 |  |  | $ | 7.27 |  |  |  | 5.04 |  |  | $ | 136,007 |
The weighted average grant date fair value of options granted during the nine months ended August 31, 2022 and 2021 was $4.56 and $4.56, respectively. 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 August 31, 2022 or November 30, 2021 as applicable. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s stock. During the three and nine months ended August 31, 2022, the Company issued 172,229 and 182,229 common shares, respectively, to option holders who exercised options for $519,274 and $551,274, respectively. During the three and nine months ended August 31, 2021, the Company issued 84,632 and 574,300 common shares, respectively, to option holders who exercised options for $0 and $1,066,000, respectively Significant option groups outstanding and exercisable at August 31, 2022 and related price and contractual life information are as follows:
|  | Outstanding |  |  | Exercisable |
|  |  |  |  | Weighted Average |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Remaining |  |  | Weighted |  |  |  |  |  | Weighted |
Range of Exercise Prices |  | Outstanding |  |  | Contractual Life (Years) |  |  | Average Exercise Price |  |  | Outstanding |  |  | Average Exercise Price |
$3.01 to $4.00 |  |  | 30,000 |  |  |  | 2.99 |  |  | $ | 3.13 |  |  |  | 30,000 |  |  | $ | 3.13 |
$6.01 to $7.00 |  |  | 3,833 |  |  |  | 3.84 |  |  | $ | 6.52 |  |  |  | 3,833 |  |  | $ | 6.52 |
$7.01 to $8.00 |  |  | 196,531 |  |  |  | 5.16 |  |  | $ | 7.63 |  |  |  | 179,879 |  |  | $ | 7.60 |
$9.01 to $10.00 |  |  | 29,000 |  |  |  | 5.51 |  |  | $ | 9.37 |  |  |  | 7,800 |  |  | $ | 9.36 |
$12.01 to $13.00 |  |  | 16,653 |  |  |  | 7.98 |  |  | $ | 12.54 |  |  |  | 9,718 |  |  | $ | 12.63 |
$13.01 to $14.00 |  |  | 44,447 |  |  |  | 2.31 |  |  | $ | 13.50 |  |  |  | 0 |  |  | $ | 0.00 |
|  |  | 320,464 |  |  |  | 4.73 |  |  | $ | 8.42 |  |  |  | 231,230 |  |  | $ | 7.27 |
A summary of the status of the Company’s non-vested options as of August 31, 2022, and changes during the nine months ended August 31, 2022, is presented below:
|  |  |  |  | Weighted Average |
|  |  |  |  | Grant-Date |
|  | Options |  |  | Fair Value |
Non-vested at November 30, 2021 |  |  | 63,034 |  |  | $ | 4.99 |
Granted |  |  | 52,500 |  |  |  | 4.56 |
Vested |  |  | (18,634 | ) |  |  | 5.83 |
Forfeited |  |  | (7,666 | ) |  |  | 6.23 |
Non-vested at August 31, 2022 |  |  | 89,234 |  |  | $ | 4.45 |
As of August 31, 2022, there was approximately $279,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2012 Plan and the 2022 Plan. The cost is expected to be recognized over a weighted-average period of 1.97 years as of August 31, 2022. The total fair value of shares vested during the nine months ended August 31, 2022 was approximately $109,000. 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 vested 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 that vested through the three and nine months ended August 31, 2022 was $0. The fair value of the options that vested through the three and nine months ended August 31, 2021 was approximately $29,000 and $85,000, respectively, and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of income. As of August 31, 2022, there was no unrecognized compensation cost related to the non-vested options of common stock. Performance and market-based vesting condition options On April 8, 2022, the Company granted 400,000 market-based vesting condition options to David Portnoy, Mark Portnoy, and Oleg Mikulinsky in the amounts of 280,000, 100,000, and 20,000, respectively. 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 and is being recognized over the requisite service period, regardless if the market condition will be met. The exercise price of the options is $12.27 and the calculated fair value of the options is $2.79. These stock options vest immediately when the price of the Company's stock reaches $25.00 per share during the seven-year option term. The grant of these options is subject to the Company's shareholders approving the 2022 Plan, which vote is expected to occur at the Company’s 2022 Annual Meeting. There were no market-based vesting condition options for the nine months ended August 31, 2021. For the nine months ended August 31, 2022, the Company recognized approximately $156,000 in compensation cost and is reflected as selling, general and administrative expense in the accompanying consolidated statement of incom e. As of August 31, 2022, there was approximately $960,000 of unrecognized compensation cost to be recognized over the remaining requisite service period of 2.5 years. On May 18, 2018, the Company entered into an Amendment Agreement (the "Amendment Agreement"), effective December 1, 2017, amending certain terms of Oleg Mikulinsky's Employment Agreement dated March 5, 2012, as previously amended. Per the Amendment Agreement, based upon certain performance criteria, the Company is required to grant Oleg Mikulinsky a percentage of up to 8,000 of qualified stock options of the Company’s common stock. For performance-based vesting condition options, the Company estimated 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 vested 1/3 upon date of grant, 1/3 on December 1, 2019 and 1/3 on November 30, 2020. The fair of these options that vested through the nine months ended August 31, 2022 and August 31, 2021 was approximately $0 and $200 and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of 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 vested 1/3 upon date of grant, 1/3 on December 1, 2020 and 1/3 on November 30, 2021. The fair value of these options that vested through the nine months ended August 31, 2022 and August 31, 2021 was approximately $0 and $2,500, respectively, and is reflected as selling, general and administrative expenses in the accompanying consolidated statement of income. As of August 31, 2022, there was no unrecognized compensation cost related to the non-vested options 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 https://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 https://asc.fasb.org/topic&trid=2228938 + Details
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