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Stockholders' Equity | 6 Months Ended
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May 31, 2024
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 May 31, 2024, and November 30, 2023, there were 17,500 and 17,500 options issued, but not yet exercised, under the 2006 Plan, respectively. As of May 31, 2024, there were no 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. As of May 31, 2024, there were 198,578 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, 2023, there were 198,578 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 May 31, 2024, there were no shares available for future issuance under the 2012 Plan. 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 reserves 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 May 31, 2024, there were 289,700 service-based options issued and 475,000 market-based restricted options granted. As of November 30, 2023, there were 186,700 service-based options issued and 475,000 market-based restricted options granted. As of May 31, 2024, there were 735,300 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. There were 0 and 103,000 options granted during the three and six months ended May 31, 2024, respectively. There were 0 and 113,00 options granted during the three and six months ended May 31, 2023, respectively. Variables used to determine the fair value of the options granted for the three and six months ended May 31, 2024 and 2023, respectively, are as follows:
|  | Three months ended |  | Six months ended
|  | May 31, |  | May 31, |  | May 31, |  | May 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Weighted average values: |  |  |  |  |  |  |  |
Expected dividends |  | 0% |  | 0% |  | 0% |  | 0%
Expected volatility |  | — |  | — |  | 60.52% |  | 55.00%
Risk free interest rate |  | — |  | — |  | 3.87% |  | 3.87%
Expected life |  | — |  | — |  | 5 years |  | 5 years
Stock option activity for options with only service-based vesting conditions for the six months ended May 31, 2024, was as follows:
|  |  |  |  | Weighted |  |  | Weighted Average Remaining |  |  |  |
|  |  |  |  | Average |  |  | Contractual |  |  | Aggregate |
|  | Options |  |  | Exercise Price |  |  | Term (Years) |  |  | Intrinsic Value |
Outstanding at November 30, 2023 |  |  | 404,278 |  |  | $ | 7.36 |  |  | 4.49 |  |  | $ | 135,330 |
Granted |  |  | 103,000 |  |  |  | 6.31 |  |  |  |  |  |  | 196,770 |
Exercised |  |  | — |  |  |  | — |  |  |  |  |  |  | — |
Expired/forfeited |  |  | (1,500 | ) |  |  | 7.04 |  |  |  |  |  |  | 1,770 |
Outstanding at May 31, 2024 |  |  | 505,778 |  |  | $ | 7.14 |  |  |  | 4.11 |  |  | $ | 884,103 |
Exercisable at May 31, 2024 |  |  | 375,718 |  |  | $ | 7.50 |  |  |  | 4.06 |  |  | $ | 594,908 |
The weighted average grant date fair value of options granted during the six months ended May 31, 2024 and May 31, 2023 was $3.13 and $2.19, 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 May 31, 2024 or November 30, 2023 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 six months ended May 31, 2024, the Company did no t issue any common shares to option holders. During the three and six months ended May 31, 2023, the Company did no t issue any common shares to option holders. Significant option groups outstanding and exercisable at May 31, 2024 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 |  |  | 25,000 |  |  |  | 1.69 |  |  | $ | 3.13 |  |  |  | 25,000 |  |  | $ | 3.13 |
$4.01 to $5.00 |  |  | 123,600 |  |  |  | 4.09 |  |  | $ | 4.70 |  |  |  | 78,665 |  |  | $ | 4.68 |
$5.01 to $6.00 |  |  | 28,000 |  |  |  | 4.56 |  |  | $ | 5.88 |  |  |  | 9,332 |  |  | $ | 5.88 |
$6.01 to $7.00 |  |  | 89,433 |  |  |  | 4.91 |  |  | $ | 6.48 |  |  |  | 39,430 |  |  | $ | 6.48 |
$7.01 to $8.00 |  |  | 149,645 |  |  |  | 4.86 |  |  | $ | 7.54 |  |  |  | 142,443 |  |  | $ | 7.52 |
$9.01 to $10.00 |  |  | 29,000 |  |  |  | 3.76 |  |  | $ | 9.37 |  |  |  | 21,583 |  |  | $ | 9.37 |
$12.01 to $13.00 |  |  | 16,653 |  |  |  | 6.23 |  |  | $ | 12.54 |  |  |  | 14,818 |  |  | $ | 12.55 |
$13.01 to $14.00 |  |  | 44,447 |  |  |  | 0.56 |  |  | $ | 13.50 |  |  |  | 44,447 |  |  | $ | 13.50 |
|  |  | 505,778 |  |  |  | 4.11 |  |  | $ | 7.14 |  |  |  | 375,718 |  |  | $ | 7.50 |
A summary of the status of the Company’s non-vested options as of May 31, 2024, and changes during the six months ended May 31, 2024, is presented below:
|  |  |  |  | Weighted Average |
|  |  |  |  | Grant-Date |
|  | Options |  |  | Fair Value |
Non-vested at November 30, 2023 |  |  | 114,193 |  |  | $ | 3.10 |
Granted |  |  | 103,000 |  |  |  | 3.13 |
Vested |  |  | (87,133 | ) |  |  | 3.30 |
Forfeited |  |  | — |  |  |  | — |
Non-vested at May 31, 2024 |  |  | 130,060 |  |  | $ | 2.99 |
As of May 31, 2024, there was approximately $324,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2006 Plan, 2012 Plan and the 2022 Plan. The cost is expected to be recognized over a weighted-average period of 1.94 years as of May 31, 2024. The total fair value of shares vested during the six months ended May 31, 2024 was approximately $288,000. 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 was approved by the Company's stockholders on October 3, 2022 at the Company’s 2022 Annual Meeting. For the six months ended May 31, 2024 and May 31, 2023, the Company recognized approximately $196,000 and $195,000, respectively, in compensation cost and is reflected as selling, general and administrative expense in the accompanying consolidated statement of incom e. As of May 31, 2024, there was approximately $276,000 of unrecognized compensation cost to be recognized over the remaining requisite service period of .72 years. On December 23, 2022, the Company entered into new two-year employment agreements (the "Agreements"), effective December 1, 2022, with David Portnoy and Mark Portnoy. Per the Agreements, David Portnoy and Mark Portnoy were awarded a signing bonus of a 5-year option to acquire 50,000 and 25,000 shares, respectively, of the Company's common stock, exercisable only if the Company's stock has a closing price at least once during the life of the option above $8.00. These options are considered to be market-based vesting condition options and accounting principles do not require the market condition to 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 $4.30 and the calculated fair value of the options is $1.76. These stock options vest immediately when the price of the Company's stock reaches $8.00 per share during the five-year option term. The price of the Company's stock reached above $8.00 on March 26, 2024. As a result, the stock options vested immediately and the remaining compensation cost was recognized. As of the six months ended May 31, 2024 and May 31, 2023, the Company recognized approximately $52,000 and $37,000, respectively, in compensation cost and is reflected as selling, general and administrative expense in the accompanying consolidated statement of income. As of May 31, 2024, there was approximately $0 of unrecognized compensation cost to be recognized over the remaining service period of .10 years.

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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 -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent + Details
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