| Stock-Based Compensation | NOTE 10 Stock-Based Compensation
On June 25, 2015, the Corporation’s Board of Directors
approved the 2015 Stock Incentive Plan (“Plan”), which
allows the granting of stock options and other equity awards to
directors, officers, employees, and eligible independent
contractors of the Corporation and is intended to retain and reward
key employees’ performance and efforts as they relate to the
Corporation’s long-term objectives and strategic plan. The
Plan was subsequently approved by shareholders at the
Corporation’s annual shareholder meeting on
September 21, 2015. A total of 700,000 shares of Common Stock
have been reserved for issuance under the Plan. Stock option awards
are granted with an exercise price equal to, or greater than, the
market price of the Corporation’s stock at the date of grant
and vest over a period of time as determined by the Corporation at
the date of grant up to the contractual ten year life at which time
the options expires.
The following table summarizes option activity for the six months
ended November 30, 2016:
Number of
Outstanding at May 31, 2016 225,000
Granted 25,000
Outstanding at November 30, 2016 250,000
Vested and exercisable options at November 30, 2016 40,000
Weighted average exercise price per share of vested and exercisable
options $ 3.12
Non-vested options at November 30, 2016 210,000
Weighted average grant-date fair value per share of non-vested
options $ 2.67
Stock-based compensation expense for the fair value of the stock
options vested during the second quarter of 2017 was approximately
$31,000 and $62,000 for the first half of fiscal 2017. At
November 30, 2016, the intrinsic value of all options
outstanding approximated $2,229,000 and had a weighted-average
remaining contractual life of approximately nine years. In
addition, the intrinsic value of all vested and exercisable options
outstanding approximated $387,000 and had a remaining contractual
life of approximately nine years. Total unrecognized compensation
expense related to stock-based awards outstanding at
November 30, 2016 was $499,000 and is to be recorded over a
weighted-average life of approximately four years.
The Corporation records all stock-based payments, including grants
of stock options, in the consolidated statements of operations
based on their fair values at the date of grant. The Corporation
currently uses the Black-Scholes option pricing model to determine
the fair value of stock options. The determination of the fair
value of stock options on the date of grant using an option-pricing
model is affected by stock price as well as assumptions that
include expected stock price volatility over the term of the
awards, expected life of the awards, risk-free interest rate, and
expected dividends.
The fair value of the options granted during the first half of
fiscal 2017 were estimated at the date of grant using the following
weighted average assumptions:
Volatility 66.0 %
Risk-free interest rate 1.47 %
Expected option life in years 7.50
Dividend yield 0 %
Volatility is estimated based on historical volatility measured
monthly for a time period equal to the expected life of the option
ending on the date of grant. The risk-free interest rate is
determined based on observed U.S. Treasury yields in effect at the
time of the grant for maturities equivalent to the expected life of
the options. The expected option life (estimated average period of
time the options will be outstanding) is estimated based on the
expected exercise date of the options. The expected dividend yield
of zero is estimated based on the dividend yield at the time of
grant as adjusted for any expected changes during the life of the
options. |
