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SHAREHOLDERS' EQUITY
 12 Months Ended
May 31, 2022
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 6:    SHAREHOLDERS' EQUITY

 

STOCK OPTION AND RESTRICTED STOCK PLANS

 

In December 2014, the Company adopted a stock option and restricted stock plan (the "2014 Plan") which provides that non-qualified options and incentive stock options and restricted stock covering an aggregate of 850,000 shares of the Company's unissued common stock may be granted to affiliates, employees, or consultants of the Company. This plan was approved by shareholders in December 2014.  The 2014 Plan expires in December 2024. Options granted under the 2014 Plan will be granted at prices not less than 80% of the then fair market value of the common stock and will expire not more than 10 years after the date of grant.

 

In December 2017, the Company adopted a stock option and restricted stock plan (the “2017 Plan”) which provides that non-qualified options and incentive stock options and restricted stock covering an aggregate of 900,000 shares of the Company’s unissued common stock may be granted to affiliates, employees, or consultants of the Company.  This plan was approved by shareholders in December 2017.  The 2017 Plan expires in December 2027.  Options granted under the 2017 Plan will be granted at prices not less than 80% of the then fair market value of the common stock and will expire not more than 10 years after the date of grant.

 

In February 2020, the Board approved the 2020 Stock Incentive Plan (the “2020 Plan”) and on December 11, 2020, the shareholders of the Company approved The Plan. The 2020 Plan authorizes the issuance of an aggregate number of common stock options and/or restricted common shares to be issued in an amount not to exceed 900,000.  The 2020 Plan authorizes the issuance of common stock options and restricted common shares to employees, directors, and consultants of the Company. During fiscal 2020, certain common stock options were granted under this plan.

 

Stock option expense during fiscal 2022 was approximately $1,260,000. This included, by department, $954,000 for administrative, $159,000 for production, $80,000 for research and development and $67,000 for sales and marketing.

 

Stock option expense during fiscal 2021 was approximately $1,355,000. This included, by department, $957,000 for administrative, $205,000 for production, $125,000 for research and development and $68,000 for sales and marketing

 

Activity as to aggregate stock options outstanding is as follows:

                                                                                                           

 

 

NUMBER OF
STOCK OPTIONS

 

EXCERCISE
PRICE RANGE
PER SHARE

 

WEIGHTED
AVERAGE
EXERCISE PRICE

Options outstanding at May 31, 2020

 

1,789,251

 

$0.82-$8.18

 

$

2.75

Options granted

  

430,616

  

$5.14-$8.70

  

$

6.73

Options excercised

 

(86,750)

 

$0.82-$3.62

 

$

1.20

Options canceled or expired

  

(51,751)

  

$2.35-$8.18

  

$

4.77

Options outstanding at May 31, 2021

 

2,081,366

 

$0.82-$8.70

 

$

3.59

Options granted

  

344,000

  

$4.25-$4.46

  

$

4.43

Options excercised

 

(39,500)

 

$1.20-$3.62

 

$

1.99

Options canceled or expired

  

(64,250)

  

$1.61-$8.18

  

$

4.41

Options outstanding at May 31, 2022

 

2,321,616

 

$0.82-$8.70

 

$

3.72

The weighted average fair value of options granted during 2022 and 2021 were $4.43 and $6.73, respectively. The aggregate intrinsic value of options exercised during 2022 and 2021 was approximately $90,000 and $501,000, respectively. The aggregate intrinsic value of options outstanding on May 31, 2022 and 2021 was approximately $1,838,000 and $2,132,000, respectively. The aggregate intrinsic value of options vested and exercisable on May 31, 2022 and 2021 was approximately $1,731,000 and $1,872,000, respectively.

 

The number of non-vested stock options included in the table above is as follows:

  

Number of
 shares

Stock options
weighted
average grant
date fair value

Non-vested shares at May 31, 2021

 

793,241

 

$

5.54

Granted

344,000

4.43

Vested 

 

(347,279)

 

 

5.40

Forfeited

(43,500)

 

5.22

Non-vested shares at May 31, 2022

 

746,462

 

$

5.11

On May 31, 2022, total compensation cost related to non-vested stock option awards not yet recognized totaled approximately $1,982,000. The weighted-average period over which this amount is expected to be recognized is 2.32 years. The weighted average remaining contractual term of options that were exercisable on May 31, 2022, was 5.47 years.

 

The following summarizes information about all the Company's stock options outstanding on May 31, 2022. These options are comprised of those granted under the 2014, 2017 and 2020 plans.

 

RANGE OF
EXERCISE PRICES

 

NUMBER
OUTSTANDING
MAY 31, 2022

 

WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE IN YEARS

 

WEIGHTED
 AVERAGE
EXERCISE PRICE

 

NUMBER
EXCERCISABLE
AT MAY 31, 2022

 

WEIGHTED
AVERAGE
EXERCISE PRICE

$0.82-$1.52

 

456,000

 

3.33

 

$1.04

 

456,000

 

$1.04

$2.25-$4.25

1,015,750

6.14

$2.90

852,500

$2.88

$4.34-$8.70

 

849,866

 

8.75

 

$6.13

 

266,654

 

$7.06

COMMON STOCK ACTIVITY

 

On January 22, 2021, the Company filed a Prospectus Supplement, for purposes of raising up to $15,000,000 to the base prospectus filed with the SEC on July 21, 2020, and declared effective by the SEC on September 30, and an ATM Agreement.

 

On May 21, 2021, in conjunction with the Company’s 2020 Stock Incentive Plan, that was approved by shareholders at the Company’s annual meeting in December 2020, the Company filed an S-8 Registration Statement to register up to 900,000 shares of the Company’s common stock that could be issued under this Plan.

 

Under ATM Agreements, sales of the Placement Shares are deemed to be “at the market offering” as defined in Rule 415 promulgated under the Securities Act.  The agent acts as sales agent under the ATM and uses commercially reasonable efforts to sell on the Company’s behalf all of the Placement Shares requested to be sold from time to time by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the agent and the Company. The Company has no obligation to sell any of the Placement Shares under the ATM Agreement, and may at any time suspend offers under, or terminate the ATM Agreement. 

During the year ended May 31, 2022, the Company sold 521,267 shares of its common stock at prices ranging from $4.02 to $5.63 under its Form S-3 Registration Statement (File No. 333-239980) and ATM Agreement which resulted in gross proceeds of approximately $2,402,000 and net proceeds to the Company of $2,317,000 after deducting commissions for each sale and legal, accounting, and other fees related to the filing of the Form S-3.

During the year ended May 31, 2021, the Company sold 158,889 shares of its common stock at prices ranging from $7.06 to $7.79 under its Form S-3 Registration Statement (File No. 333-239980) and ATM Agreement which resulted in gross proceeds of approximately $1,177,000 and net proceeds to the Company of $1,011,000 after deducting commissions for each sale and legal, accounting, and other fees related to the filing of the Form S-3.

 

During the year ended May 31, 2022, options to purchase 39,500 shares of common stock were exercised at prices ranging from $1.20 to $3.62.  Total net proceeds to the Company were approximately $77,000.

 

During the year ended May 31, 2021, 321,429 shares of common stock were converted from Preferred Stock as described below in “Preferred Stock Activity”.

 

PREFERRED STOCK ACTIVITY

 

On February 24, 2020, the Company entered into and closed on a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Palm Global Small Cap Master Fund LP (“Palm”) pursuant to which the Company agreed to sell and issue to Palm, and Palm agreed to purchase from the Company, 571,429 shares of the Company’s Series A 5% Convertible Preferred Stock, $0.08 par value per share for a purchase price of approximately $2 million, or $3.50 per Series A Convertible Preferred Stock. Under the terms of the Stock Purchase Agreement, each share of issued Convertible Preferred Stock can be converted at any time by Palm into one share of the Company’s common stock, subject to certain adjustments.

 

The Series A 5% Convertible Preferred Stock accrued annual preferred dividends at a rate of $0.175 per Series A 5% Convertible Preferred Share. However, accruing dividends were payable only when, as, and if declared by the Board and the Company had no obligation to pay such accruing dividends.

 

On March 24, 2020, Palm converted 250,000 shares of Convertible Preferred Stock into 250,000 shares of unregistered common stock. On July 21, 2020, the Company filed with the SEC a registration statement on Form S-3, that among other things, registered 571,429 common shares issued, or to be issued, to Palm upon conversion of the Convertible Preferred Stock into common shares. On September 30, 2020, the Company received a Notice of Effectiveness from the Securities and Exchange Commission for registration of these shares. On January 21, 2021, Palm Converted their remaining 321,429 Convertible Preferred Shares into registered common shares. On May 30, 2021, the Company had no shares of Preferred Stock outstanding. Under the terms of the Preferred Stock Purchase Agreement, none of the cumulative Dividends were paid to Palm during the period they owned the Preferred Stock. Once converted to common shares, Palm lost all rights to receive any past cumulative dividends.