Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

v3.20.2
Stock Based Compensation
12 Months Ended
Aug. 31, 2020
Stock Based Compensation  
Stock Based Compensation

Note 11: Stock Based Compensation

Employee Stock Option Plan Increase

On July 1, 2020, the board of directors unanimously approved an increase in the number of shares of common stock issuable under the Company's 2017 Stock Option/Stock Issuance Plan from 250,000 to 3,000,000, subject to approval by a majority of the Company's shareholders no later than the next regularly scheduled annual shareholders meeting. Also on July 1, 2020, the board approved the award, primarily to current employees, and subject to shareholder approval no later than the next regularly scheduled annual meeting, of grants of options to purchase 1,235,159 shares of the Company's common stock at an exercise price of $5.40 per share, which was the closing price of the Company's common stock as reported by Nasdaq at the close of trading on the day of the board's action. Of the options awarded, 995,000 are designated as "incentive stock options" ("ISO"), and 280,159 are designated as "non-qualifying" ("NQ")or "non-statutory" options under the Internal Revenue Code. These options have a 10-year life, and will vest over a four-year period, with 25% vesting on July 1, 2021, and the remainder vesting ratably on a quarterly basis over the following three years. During the three months ended August 31, 2020 an additional 270,937 ISOs were granted at prices between $3.44 and $5.40, the closing price on the date of grant and 148,959 of the options granted between July 1, 2020 and August 31, 2020 were cancelled. The remaining 1,357,137 options are reported as non-exercisable in the table below.

The Company recognized approximately $1,300,000 and $369,000 of compensation expense for the years ended August 31, 2020, and 2019, respectively. During the year ended August 31, 2020, the Company fully vested all options granted to personnel who were terminated as a result of the Vensure Asset Sale, as described above, which resulted in the acceleration of 9,737 options and $483,000 of stock-based compensation recorded in “stock-based compensation – general and administrative.”

At August 31, 2020, the total unrecognized deferred share-based compensation expected to be recognized over the remaining weighted average vesting periods of 1.8 years for outstanding grants was $5.7 million.

A summary of option activity is as follows:

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding and Exercisable

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

Weighted

 

 

Number

 

Remaining

 

Average

 

 

of

 

Contractual

 

Exercise

 

 

Options

 

Life

 

Price

 

 

 

 

(In years)

 

 

 

Balance, August 31, 2018

    

33,719

    

9.77

    

$

138.00

Granted

 

36,073

 

10.0

 

$

43.60

Exercised

 

 —

 

 —

 

$

 —

Forfeited

 

(19,043)

 

8.06

 

$

111.20

Balance, August 31, 2019

 

50,749

 

9.0

 

$

95.20

Granted

 

1,506,096

 

10.0

 

$

5.30

Exercised

 

 —

 

 —

 

$

 —

Forfeited

 

(158,105)

 

9.6

 

$

56.08

Balance at August 31, 2020

 

1,398,740

 

9.51

 

$

8.18

 

Options outstanding as of August 31, 2020 and 2019 had aggregate intrinsic value of $22,000 and $575,000, respectively.

At August 31, 2020, the total unrecognized deferred share-based compensation expected to be recognized over the remaining weighted average vesting periods of 3.7 years for outstanding grants was $6.0 million.

Option vesting activity was as follows:

 

 

 

 

 

 

 

 

 

 

    

    

    

Weighted

    

Weighted

 

 

Number

 

Remaining

 

Average

 

 

of

 

Contractual

 

Exercise

Options Vested

 

Options

 

Life

 

Price

 

 

 

 

(In years)

 

 

 

Balance, August 31, 2018

 

4,513

 

8.6

 

$

182.40

Vested

 

7,410

 

8.6

 

$

137.20

Exercised

 

 —

 

 —

 

$

 —

Forfeited

 

(1,632)

 

8.1

 

$

164.40

Balance, August 31, 2019

 

10.291

 

8.0

 

$

152.80

Vested

 

19,414

 

8.1

 

$

89.06

Exercised

 

 —

 

 —

 

$

 —

Forfeited

 

(1,295)

 

6.4

 

$

140.09

Balance at August 31, 2020

 

28,410

 

7.2

 

$

115.10

 

The following table summarizes information about stock options outstanding and vested at August 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding

 

 

 

Options Vested

 

 

Number

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

of

 

Number

 

Average

 

Weighted

 

 

 

Weighted

 

Weighted

 

 

Options

 

of

 

Remaining

 

Average

 

Number

 

Remaining

 

Average

 

 

not

 

Options

 

Contractual

 

Exercise

 

of

 

Contractual

 

Exercise

Exercise Prices

 

Exercisable

 

Exercisable

 

Life

 

Price

 

Options

 

Life

 

Price

 

 

 

 

 

 

(In years)

 

 

 

 

 

 

(In years)

 

 

 

$3.44-10.00

    

1,357,137

    

 —

    

9.9

    

$

5.31

    

 —

    

 —

    

$

 —

$10.01-$40.00

 

 —

 

3,917

 

8.8

 

 

23.00

 

1,636

 

8.8

 

 

24.84

$40.01-$80.00

 

 —

 

13,509

 

8.6

 

 

51.21

 

7,798

 

8.6

 

 

51.22

$80.01-$120.00

 

 —

 

10,427

 

7.7

 

 

102.92

 

7,295

 

7.7

 

 

102.63

$120.01-$160.00

 

 

 

12,625

 

7.0

 

 

155.28

 

10,558

 

7.0

 

 

155.41

$160.01-$391.60

 

 —

 

1,124

 

6.9

 

 

391.60

 

1,124

 

6.9

 

 

391.60

 

 

1,357,137

 

41,603

 

7.7

 

$

8.17

 

28,411

 

7.2

 

$

115.09

 

 

The options not exercisable were conditionally granted by the Company’s board of directors between July 1, 2020 and August 31, 2020 and are not exercisable until shareholder approval is received for the increase in the option pool as discussed above.

 

The number of options and exercise prices have been presented retroactively for the 1 for 40 reverse stock split, which was effective on December 17, 2019.