Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

v3.21.2
Stock Based Compensation
9 Months Ended
May 31, 2021
Stock Based Compensation  
Stock Based Compensation

Note 6: Stock Based Compensation

In March 2017, the Company adopted its 2017 Stock Option/Stock Issuance Plan (the “Plan”). The Plan provides incentives to eligible employees, officers, directors and consultants in the form of incentive stock options (“ISOs”), non-qualified stock options (“NQs”), (each of which is exercisable into shares of common stock) (collectively, “Options”) or shares of common stock (“Share Grants”).

On July 1, 2020, our Board of Directors unanimously approved an increase in the number of shares of common stock issuable under the Plan from 250,000 to 3,000,000 and granted options that were contingent upon shareholder approval. On March 31, 2021, the Company’s shareholders approved the increase in the number of shares of common stock issuable under the Plan as well as the various contingent grant awards under the Plan since July 1, 2020. Effective with the shareholders’ approval, all previously unexercisable option grant awards became exercisable and the option awards granted since July 1, 2020 were no longer subject to any contingency not set forth in the Plan.

On June 4, 2021, the Company registered an aggregate of 3,000,000 shares, par value $.0001 per share, reserved for issuance under the Plan.

For all options granted prior to July 1, 2020, each option is immediately exercisable and has a term of service vesting provision over a period of time as follows: 25% vest after a 12-month service period following the award, with the balance vesting in equal monthly installments over the succeeding 36 months.The options granted on or after July 1, 2020, typically vest over four years, with 25% of the grant vesting one year from the grant date, and the remainder in equal quarterly installments over the succeeding 12 quarters. All options granted to date have a stated ten-year term.

Stock grants are issued at fair value, considered to be the market price on the grant date. The fair value of option awards is estimated on the grant date using the Black-Scholes stock option pricing model.

Following our adoption of ASU 2016-09, we elected to account for forfeitures under the Plan as they occur. Any compensation cost previously recognized for an unvested award that is forfeited because of a failure to satisfy a service condition is reversed in the period of the forfeiture.

The Company recognized approximately $444,000 and $1,363,000 of compensation expense for the three and nine months ended May 31, 2021, respectively. The Company recognized approximately $75,000 and $745,000 of compensation expense for the three and nine months ended May 31, 2020, respectively.

The Company compensates its Board members through grants of common stock for services performed. These services have been accrued within the accounts payable and other accrued liabilities on the Condensed Consolidated Balance Sheet. The Company has incurred $56,000 and $113,000 for the three and nine months ended May 31, 2021, respectively. The Company incurred $75,000 and $150,000 for the three and nine months ended May 31, 2020, respectively.

At May 31, 2021, the total unrecognized deferred stock-based compensation expected to be recognized over the remaining weighted average vesting periods of 3.1 years for outstanding grants was $4.8 million.

The following table summarizes option activity during the nine months ended May 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding and Exercisable

 

    

    

    

Weighted

    

    

 

 

 

 

 

Average

 

Weighted

 

 

Number

 

Remaining

 

Average

 

 

of

 

Contractual

 

Exercise

 

 

Options

 

Life

 

Price

 

 

 

 

(In years)

 

 

 

Balance Outstanding, August 31, 2020

 

1,398,740

 

9.5

 

$

8.18

Granted

 

715,000

 

10.0

 

 

3.07

Exercised

 

 —

 

 —

 

 

 —

Forfeited

 

(287,192)

 

9.5

 

 

4.32

Balance Outstanding at May 31, 2021

 

1,826,548

 

9.1

 

$

6.62

 

 

 

 

 

 

 

 

Balance Exercisable at May 31, 2021

 

1,826,548

 

 

 

 

 

 

Options outstanding as of May 31, 2021 had aggregate intrinsic value of $45,000.

Option vesting activity during the nine months ended May 31, 2021 was as follows:

 

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

    

Weighted

 

 

Number

 

Remaining

 

Average

 

 

of

 

Contractual

 

Exercise

Options Vested

 

Options

 

Life

 

Price

 

 

 

 

(In years)

 

 

 

 

 

 

 

 

 

 

 

Balance, August 31, 2020

 

28,410

 

7.2

 

$

115.10

Vested

 

5,631

 

7.4

 

 

93.61

Exercised

 

 —

 

 —

 

 

 —

Forfeited

 

(656)

 

7.2

 

 

50.33

Balance at May 31, 2021

 

33,385

 

7.0

 

$

112.74

 

The following table summarizes information about stock options outstanding and vested at May 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

Options Vested

 

    

    

    

    

    

Weighted

    

    

 

    

    

    

Weighted

    

    

 

 

 

 

 

 

 

Average

 

Weighted

 

 

 

Average

 

Weighted

 

 

 

 

Number of

 

Remaining

 

Average

 

 

 

Remaining

 

Average

 

 

 

 

Options

 

Contractual

 

Exercise

 

Number of

 

Contractual

 

Exercise

Exercise Prices

 

 

 

Exercisable

 

Life

 

Price

 

Options

 

Life

 

Price

 

 

 

 

 

 

(In Years)

 

 

 

 

 

 

(In Years)

 

 

 

$2.23‑10.00

 

 

 

1,785,730

 

9.3

 

$

4.59

 

 —

 

 —

 

$

 —

$10.01‑$40.00

 

 

 

3,500

 

8.0

 

 

21.69

 

1,882

 

8.0

 

 

21.66

$40.01–$80.00

 

 

 

13,396

 

7.8

 

 

51.21

 

9,529

 

7.8

 

 

51.22

$80.01–$120.00

 

 

 

10,303

 

7.0

 

 

102.90

 

8,542

 

7.0

 

 

102.79

$120.01–$160.00

 

 

 

12,495

 

6.3

 

 

155.24

 

12,307

 

6.2

 

 

155.73

$160.01‑$391.60

 

 

 

1,126

 

6.1

 

 

391.60

 

1,125

 

6.1

 

 

391.60

 

 

 

 

1,826,548

 

9.1

 

$

6.62

 

33,385

 

7.0

 

$

112.74

 

On March 31, 2021, with the shareholders approval for the increase in the option pool, the contingent options granted by our Board of Directors between July 1, 2020 and May 31, 2021 became exercisable. The options remain subject to service vesting period requirements retroactive to the grant date, as described above.